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Global Advanced Master of Business Administration
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CAPSTONE PROJECT REPORT STRATEGIC MANAGEMENT
DEVELOPMENT BUSINESS STRATEGY
FOR PERIOD OF 2013 — 2018 OF HANOI FOOD IMPORT — EXPORT
JOINT STOCK COMPANY (VIHAFOODCO)
Class: GaMBAOL.COITI
Group 3:
Nguyen Huu Ba Nguyen Van Chien
Le Thị Thanh Hai
Nghiem Quoc Phu Ngo Xuan Phục
Ho Chi Minh City, January 2013
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GIRIGGS [eam 3- Class GaMBAOT CƠTIT] Thesis — Subject: Strategic Management
TABLE OF CONTENTS
CONTILNTS enter i lable of figures) Thu n2 2n 12 nh nà n1 nà) VI
Pable of tables ảẳẢ.ƠĂ Vil
LETTER OF THANKS 2 202222222 ve IX
INTRODUCTION 2022 sa |
| Reasons for choOSINE {OpIC: 2 2 22222222222 na l 2 Study Objectives: eben e bb bttbvttteeetnttene l 3 Objects and scope of the research cece ect 2 4 Research Methodology: 22222022 2 S Scientific and practical significance of the research topIc: 2 6 The structure of the fOpIC: 2.22222222222202 2 220 na 3 CHAPTER 1 THEORETICAL BASIS OF STRATEGY ANDSTRATEGIC PLANNING ccc ecb b bet biteectittvitvttenetttettnent 4 1.1 The concept of strategy and business strategy 000 0.0.00 ccc c2 22c 4 I.I.I The concept s22 222222222 He 4 I.1.2 The role of stratepic management 4 I.2 The steps for strategy pÏanning ca 5
I.2.1 Environmental study 2222 222222222 na 5
2.1.1 External environment 2ê 6 | 2.1.2 Internal environment of business: 10 1.2.2 Determine the goals of the business II 1.2.3 Develop strategy choose key strategy oon II L3 Supporting tools for identifving selecting strateples 12
1.3.1 The external factors evaluation matrix tool - EFE 12
| 32 The internal factors evaluation matrIx tool —IFE H3
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Khổ Feam 3- Class GaMBAO] COLT] Thesis — Subject: Strategic Management
GIRIGGS
13.3 CPM - Company Profile Matrix tool Ta ' I4
134 SWOT matrix tool LA
19.9 OSP?M Mairi fool ee MO
CHAPTER 2 OPFERATING ENVIRONMENT OF VIHAFOODCO
COMPANY se 18
2.1 Overview on the VIHAFOODCO) i8
2.1.1 Establishment legality) cece 18
2 1.2 The process of formation and development: ee 19 2.1.3 Organizational StTUICEUT€: 2222 22022222 ya 20
2.1.4 Production capacity: 2222222222222 se 21
2.2 Analysis of the external environment (EFE), identify opportunities and risks affecting the business activities of the company: 23 2.2.1 Macro environm€InI: 22 2222222 23 2.2.1.1 Political environment, policy and law: 23 2.2.1.2 Population, social and cultural environmeht z3 2.2.1.3 Technology environment: à 2222 24 2.2.1.4 Economic environmehnI: ì 25
2.22 Micro EnvironmenI: 2 222222 27
2.2.2.1 The world market: - - - 0 2221212111 11111 1121112211 1011 21111 te 27 2.2.2.2 Vietnam's rice export market: ààccccc si 32 2.2.2.3 Evaluation of Competitors’ competitiveness in the supply of rice for export by CPM 222.2222 22222222 se 34 2.2.3 Identify opportunities and risks affecting the business activities of the
VU U làsyiiẳẳẳẳiiiiiiaiaiẳaẳäẳäẳẳ 37
2.2.3.1 OpportunIfes: 2222 ya 37 Mhaiađáaẳaaaiaiẳắẳắđiaiađađẳđẳắđẳđắđa 37 2.2.3.3 Matrix evaluates external factors: oe 38 2.3 Internal environment analysis of the Company: 0 40
23.1 Analysis of business activity: cence 40
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( “RIC ŒS Leam 3- Class CGaMIH3AUT COTTIT — Thesis — Subject: Strategic Management
2.31 1 Management nhu ứẲ
23.1.2 Marketing T3
2.3.1.3 Producing operations and export supply- 48 2.3.1.4 Information system T111 n1 TT TT 11111151151 kk 1111k cv c1,
2.3.1.5 Human Resources: cette 53
2.3.1.6 The financial situation of the company: ee 54
2.3.2 Identify the strengths weaknesses and internal elements -IFE Matrix: 60
2.3.2.1 Strengths: 222222222222 na 60
2.3.2.2 WeaknesSeS: 2.22222222222022 2n na 61 2.3.2.3 Internal Factor Evaluation Matrix (matrix - [FE): 61
2.4 Construct value chain for VIHAFOODCO: ooo 63 2.4.1 Overview of export rice value cham: 63 2.4.2 Value Chain of VIHAFOODCO - export suppliers: 65 CHAPTER 3 CONSTRUCTION OF BUSINESS STRATEGYFOR THE PERIOD OE 2013 - 2018 OEF VHHAFOODCO 66 3.1 Identify the vision and mission of VIHAFOODCO- 66 An na a cece eee b ssbb bee eeceeeeceetctieeeteeeteetteesteeteee: 66 3.12 MISSION: 222.222 2222220222 nghe 66 3.1.3 Core vaÌU€: 222222022202 22 nho 66 3.2 Identify the objectives: 0c eee ung 67 33 Construction of business strategy for the period 2013-2018 of VIHAFOODCO- 22.2222 222022022 He 67
3.3.1 General OobJ€CfIV€S: 222 2222222222222 2 na 67 3.3.2 SpecIflc ObJ€CEIV€S: 2 2222222220222 n2 nu n2 67 3.33 SWOT matrix of VIHAFOODCO- 7I 3.34 — Selection Strategy by QSPM.- 73 3.3.5 Solutions to implement the business strategy of VIHAFOODCO for the
period 2013-2018 0000 re ¬ TS
3.3.5.1 Market Development Stratèv: TS
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GRIGGS
3352 Branding Strategy Oe AB
34 Recommendations: rs 8l
34] For the Government tt SI
34.2 Recommendations for companies in the industry (VFA)
CONCLUSION cee er wt acc 84
APPENDIX T6 Ổn ok a St a co 85
REFERENCES nà 90
Trang 6sứ Team 3- Class GaMBAO! COLTI I hesis — Subject: Strategic Management
GRIGGS
Table of Figures:
|'igure I-l: Total strategic management Model of Fred R David 5 Iipure I-2: Model of five competitive forces of Michael E.Porter 7 Figure 2-1 The structure of organization, management and operation of the VIHAFOODC(Q) T111 T111 511211 n chày 2] Figure 2-2: The process of rice processing in the factOFV 22 Figure 2-3: Global rice production from 2000 - 2012 * (million tons) 28 igure 2-4: Rice consumption volume and reserve/consumption rate in the world throuphout the ÿ€arS .2222222 222222222 re 29 Figure 2-5: Turnover and export production in the first nine months of 2012 and compared with the same period of the previous V€ar 32 Figure 2-6: Density of exported rice in recent years ccc 22c 2222222: 33 Figure 2-7: Export market of Vietnamese rIC€ cà 2e 34 J'igure 2-8: Export supply situatton from 2007-2012 - ccc:cc2cs2: 43 [igure 2-9: The situation of export entrustment from 2007-2012 44 Figure 2-10: Rice structure of VIHAFOODCO sold from 2007 — 2012*% 45 [Figure 2-l [: Labor education structure ofthe VIHAFOOIDCO 53 [igure 2-12: General model of the rice value chain -.:52-c22<<‡52 63 Iigure 2-l3: Value Chain model of VIHAFOODCO - export supplier 65 Figure 3-1: Revenue and revenue trend for the period 2007 - 2012 68 Figure 3-2: estimated revenue for the period of 2013 - 2018 70 |igure 3-3: Construction of brand structure cà ề 78 Iigure 3-4: The brand ImaBe c2 222222222 ea 79
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ff Team 3- Class GaMBAOT COLT] Thesis — Subject: Strategic Management ( RAC ¢ ry,
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Table of table:
‘Table 1-1 The external factors evaluation matrix tool - EFE 13
Table 1-2) The internal factors evaluation matrix tool - PFE, 13 Table 1-3) SWOT Matrix
‘Table 2-1) Average population by urban and rural areas over the years 2007 to 2012 os» uy res § HE 0E 5 THƠ US ROS ee OR eR CoG wR BEG LoD ON ES 23 ‘Table 2-2: Rice export of some of the world's major countries over the years 2006- 2013*
Table 2-3: Some largest rice-importing countries over the years 2006-2013 * 31 Table 2-4: Prices of some exported rice in the world in recent years (U.S.D /ton) 32 Table 2-5: Company Profile MatrIx 22 22222 yÀ 36 Table 2-6: The matrix evaluating external elements 38 Table 2-7: Rice production situation from 2007-2012 .ị 43 Table 2-8: The output and rice proportion from 2007-2012* 44 Table 2-9: The rice business situation by customers from 2007-2012* 46 Table 2-10: The market of countries is consuming the Company’s products 47 Table 2-11: The change in the output of self-production and outside procurement of the company from 2007-2012*
Table 2-12: The proportion of self-production and outside procurement of the company from 2007-2012* 222222 222222 nh 49
Table 2-13: Total outside procurement from 2007-2012* 49
Table 2-14: The operation method of outside procurement S0 Table 2-15: The situation of internal recovery rate of finished products from 2007 -
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Team 3- Class GaMBAO] COTE Thesis — Subject: Strategic Management
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Table 2-16) The situation of increasing and decreasing of fixed assets from 2007-
20123 52
Table 2-17: The situation of labor quality from 2007-2012* Pt Table 2-18: The operation results of the Company trom 2007-2012*: (Unit: Million VND) _- 54
Table 2-19: The balance sheet of the company from 2007 — 6 months of 2012 (unit: Milhion VND) nh cố cty 55 Table 2-20: Analysis of Ratios over the vears 2007-2012* 55
Table 2-21: Analysis of operating ratio over the years 2007-2012 * 56
Table 2-22: Analysis of financial leverage ratio over the years 2007-2012 * 57
Table 2-23: Analysis of the profitability ratio over the years 2007-2012 * 58
Table 2-24: Internal factors evaluation MatrIx 62
Table 3-1: Revenue for the period 2007-2012 .22 22222222222 22111225522 68 Table 3-2: predict the revenue for the period 2013-2018 69
Table 3-3: Test the model by excel 222212222112 221122111222 nọ 70 Table 3-4: SWOT matrix of VIHAFOODCO: 71 Taole So: Alfermalive ale Ql a ec.s0us ase san amc, none omens se mone nn ses wean ean tem ER 72 Table 3-6: QSPM for strategy selection ccc c cece 22c 22 2n nhree 74
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( "HP € Team 3- Class GaMB.ADOT COTTT Thesis - SubJect: Strategic Manapement
' IÁT,
ELETIIEIERRCIE THANhRS
With deepest gratitude, we would like to send to the teachers of Griggs
University, with their widen knowledge and enthusiasm to impart valuable
knowledge to us during the past two years
We sincerely thank the Board of Directors and members in the Hanoi Food Import - Export Joint Stock Company for providing related documents and information with dedicated guidance to help us complete our studies in a thorough and practical way
We also want to send our sincere thanks to family, friends and colleagues supported, shared and encouraged us during the period of study and research Our essay has done within nearly three months period, and the majority of team members are at the first time to learn about the business of rice supply It is obviously that our knowledge is limited, and lack of real experience on this business, hence we wish to have your valuable feedback from teachers and classmates so that we can learn from your knowledgeable point of view
Finally, we would like to wish the teachers in Griggs University a good health, and with the strong belief to continue your noble mission is to impart knowledge to future generations
Yours Sincerely,
HCMC, dated 03 01 2013
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GRIGGS
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INTRODUCTION
1 Reasons for choosing topic:
Under market — oriented economic development and international economic integration Viet Nam has been a member of the Association of Southeast Asian Nations since July 1995 and APEC since November 1998 and the 150""member of World Trade Organization since 7'" November, 2006 This can be considered as a key to open the door for Vietnamese goods in trading with the ones of other
countries in globalization environment It has opened great opportunities but also
made challenges to Vietnam enterprises
In the current globalization, the key for businesses to be successful is that they are ready to face with any changes and have suitable orientation on development
strategy The increasingly fierce competition requires business to be active and
timely capture market demand, to meet the demand in the best compared to
competitors
No business can survive and develop for a long-term in the market without the right strategy for its own development A right strategy will help business to develop strengths and overcome weakness, also help business to take advantages of the opportunities and overcome risks Building a proper strategy will help business to have better competitive advantages, maintain stable growth and_ sustainable development
Along with the process of international economic integration, Viet Nam currently has an important position in exporting agricultural products such as rice, coffee, pepper in the world However, the value or brand name of agricultural products of exporting companies in Viet Nam is no or less known due to the lack of
competitiveness and suitable business strategy
As the fact above, we choose the topic “Building business strategy for the period of 2013-2018 of Ha Not food import-export joint stock company” as our research
2 Study objectives:
The purpose of this topic is to plan business strategy of rice for Ha Noi food import- export joint stock company (called VIHAFOODCO) in the period of 2013 — 2018 and propose strategic solutions to implement the strategy to bring VIHAFOODCO
into one of reputed suppliers of exporting rice in Viet Nam market For this
purpose the thesis will include the following parts:
- Generalize basic theory for business strategy process and tools for building strategy
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_“ F[eam 3- Class GaMBAODT.COTTI Thesis — Subject: Strategic Management
GRIGGS
- Analyze external elements internal elements to seek for strengths weaknesses, opportunities and threats of VIHTAFOODCO
Identify business target based on strengths - weaknesses opportunities — threats
plan business strategy and propose solutions to implement that strategy 3 Objects and scope of the research
- The object of this thesis is business strategy of VIHAFOODCO
- Operation of VIHAFOODCO 1s trading in agricultural products Particularly, rice
production and supply for exporting 1s the main field of the company Therefore,
scope of thesis is to focus on providing exporting rice of VIHAFOODCO 4 Research Methodology:
This thesis has used the following research methods:
-Approaching methods: When analyzing business situation of VIHAFOODCO, use particular approaching method, when analyzing the internal and external environmental factors affecting to business operations of the company, use historical approaching method, combining quantitative and qualitative approaching
method
- Methods of collecting primary information: Thesis uses synthetic methods of observation, Interviews, expertise
- Method of information processing: Thesis uses modeling methods, causal analysis, and descriptive statistics to analyze the results of business operations Combining methods of the subjects: Strategic Management, Human Resource Management, Marketing
- Secondary information source: The quarterly and annual reports of the Vietnam
Food Association, agricultural books and magazines, web site (www.riceonline.com, www vietfood.org.vn, etc.), the reports published by market research company on the export — import of rice in Vietnam and the world
- The primary information sources: The report and documentation of
VIHAFOODCO
5 Scientific and practical significance of the research topic:
ry Scientific Significance:
Strategic planning is an effective method for enterprises to effectively use resources as oriented) However, for many various reasons a little of Vietnamese business
pays attention to applying business strategies into their business operations
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The study will present an approaching method to plan business development
strategy and apply in specific conditions of VIHAFOODCO thereby contributing to
experience tn planning development strategy for Vietnamese enterprises r Practical significance:
Applying planning process on development strategy in order to determine the
strengths weaknesses opportunities and threats to rice exporting activities of
VIHAFOODCO then to identify and propose solutions to implement development
strategy of VIHAFOODCO in period of 2013 - 2018
6 The structure of the topic:
In addition to the introduction, conclusion, contents, appendixes and references, this thesis 1s divided into three chapters:
Chapter 1: — Basic theory of strategy, business strategy planning Chapter 2: Analysis of the business environment of VIHAFOODCO
Chaptcr 3: Building the strategy for the period of 2013 — 2018 of VIHAFOODCO
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t1 \ s [eam 3- CTlass GaMlHAOT COTTI [hesis - Sublect: Stratepic Management
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CHAPTER I
THEORETICAL BASIS OF STRATEGY ANDSTRATEGIC
PLANNING
1.1 The concept of strategy and business strategy
1.1.1 The concept
The importance of strategic planning and implementation for enterprises 1s shown as followings:
- Business strategy plays decisive role in the survival and development of
enterprises, help enterprises to cope with the rapid changes of environment
- Strategy is the basis for determining the specific business activities target and measuring performance
- Strategy makes clear business purpose and direction to avoid the error in the direction for the future
- Business strategy makes efficient resource allocation, improve the internal situation, monitor and inspect the implementation of objectives
1.1.2 The role of strategic management
Currently, depending on the approaching method, there are many different concepts of strategy:
- According Fred R David: "Strategy is the means to achieve long-term goals."
- According to Alfred Chandler (Harvard University): "Business strategy includes
the determination of long-term basic goals of the business, also choose the method or action and the resources allocation to implement that goal"
Business strategy of an enterprise is an overall program of action towards the implementation of the goals proposed Business strategy 1s not aimed to outline how to achieve these goals It is the task of a variety of support programs, the function strategy It only creates the framework guiding thinking for action
Although there are many different definitions in general, business strategy includes the following basic contents:
- The target that business wants to reach
- The decisions and actions closely related to each other to achieve the objective
- Efficiently implement resource allocation the ability to accomplish objectives
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⁄“ Team 3- Class GaMB.AOT COTIETI — Thesis - SubJect Strategeic Manapement
GIRIGGS
Strategic planning is a systematic process in order to determine the business
strategies used to enhance the competitive advantages of the business It covers from the environmental analvsis to rdentify strengths weaknesses opportunities and threats identify and build long-term target, implement business strategies based on promoting the strengths maximum rectify weaknesses, take advantages of the
opportunities and minimize the risks
1.2 The steps for strategy planning
1.2.1 Environmental study
Feasible and effective strategy planning is aimed at reaching the targets, business needs to implement under a procedure of Fred R David (strategy formulation
stage )
Figure 1-1: Total strategic management Model of Fred R David'
[ —— <a Ae ak ene ane | External environment Long-term ' | Define annual ở :
analysis to aware of objectives : objectives : opportunities and threats ‘ :
4 f } '
| ' :
| ;
Defination ————— , + | Evaluatio
of |») Objective review | ‡_- D | Allowcate Leal n and
| resources : M
objectives | ị , easure
| : , ment
Internal environment : ° :
analysis to determing Selection of : ISolutions :
Strength and Strategic ‘ ' Weaknesses ¬ alternatives ‘ ,
: :
Strategic Strategic | | Strategic
formation Impleméntation ‘Appraisal |
red Ro David ( ‘concept of Strategic Management - Staustcs Publish House 2003 — Page 187
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( RI ) Feam 3- Class GaMBAOL COTTI Thesis — Subject: Strategic Management
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1.2.1.1 External environment
The assessment of the external environment shows us major opportunities and risks
for businesses to propose strategies to take advantages of opportunities and avoid dangers and minimize risks External environment 1s divided into macro-
environment and micro-environment 7 Macro environment of the business
Analyze and evaluate the macro environment of the business through the following factors:
e Economic factors:
- Gross Domestic Product (GDP): Analysis of Gross Domestic Product gives us
an overview on the health of the economy, it indirectly impacts on production and business activities of all the industries in economy, and also be leverage to promote
the business activities of the enterprise
- Per capita income: The increase in per capita income will lead to an increase in demand, quantity and quality of goods, and to change tastes and habits of consumers
- Inflation, exchange rate, financial and monetary policies also influence the business strategy of the enterprise Especially is import-export industry as the value of goods 1s priced in foreign currency The increase/ decrease in value of domestic currency will be the factors to reduce / increase the export value of the business
e Government, politics, law and society
- Business must comply with government’s regulations, provisions on tax, safety, environmental protection, export-import policies, protection of industrial property and the stability of politic and society also importantly influence on business
strategy
- Consumer characteristics, lifestyle or culture of importing country will affect the demand, the tastes of consumers in that country about the pieces, design, quality of the goods
- Growth rate of the population directly impact on demand, rising commodity markets, so positively impact on business strategy
e Natural factors:
Currently the wasteful use of natural resources, polluting the environment and the state of natural disaster flood makes natural resources become increasingly scarce As a result it affects the inputs for the production process and consuming markets
And this affects business strategy Analyze of natural factors to show its impact on strategy Is essential and important in planning business strategy
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ST Team 3- Class GaMBAOT COTT] Thesis — Subject: Strategic Management
GiRIGGGS
seem - ene nee rata
e technical and technology fact
Technology ts a key factor for the success of the business More and more new and advanced technologies introduce to create a good business opportunity for anyone Who knows to capture, but they are also the danger to the competitor Nascent
technology would be an opportunity for businesses to capture new products with high competitiveness and would be danger if other business has applied before New technologies create new and better products, making existing products to become obsolete or shorten the product s life cycle
> Micro environment -competitive environment
Micro-environment analysis 1s to examine the factors appearing in the industry
deciding the nature and level of competition in the industry This 1s also called the competitive environment as it 1s attached directly to each business and most of
competitive activities of business occur in this environment Michael E.Porter gave
a model of five competitive forces, creating competition in an industry as follows:
Figure 1-2: Model of five competitive forces of Michael E Porter
Porter’s Five Forces
Potential Entrants Threat of new Bargaining power ? entrants of suppliers Rivalry among
Existing firms Bargaining power of
Buyers Threat of substitute products or services Substitutes
e Risk of reducing market share from new competitors (potential rivals):
According to M-Porter, potential competitors are not currently available in the industry but may affect the industry in the future Potential competitors more or
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Team 3- Class GaMBAO! COLT Thesis — Subject: Strategic Management
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less their pressure to the industry strong or weak depending on the following factors:
- The appeal of the indusiry, This tacior is expressed through indicators such as earning rates, the number of customers the number of firms in the industry
- Barriers to entry: the factors that make the entry to industry more difficult and costly
+ Technique + Capital
+ Commercial Factors: Distribution system branding, customer system
+ Specific resources: Input materials controlled degree, patents human
resources, the protection of the government, etc
As new competitor joined in the industry, it will reduce the market share and profits of the business To protect its competitive position, enterprises have to raise entry barriers through measures such as product diversification; scale advantages or initial investment costs are large if joining the industry
e The ability to force the prices of suppliers (providers): As the supplier has an advantage, they can put pressure to create disadvantages for enterprises
e The number and size of supplier: the number of suppliers will decide competitive pressures, their negotiating power to industry, business If there are only a few large-scale suppliers, it will create competitive pressures, affecting the entire industry's production and business activities
The ability to replace the supplier's products: In this issue, we study the ability to replace the input by the suppliers and the cost of switching suppliers (Switching
Cost)
Information about suppliers: In the current era, information is always a factor promoting the development of trading, information about providers has a major influence on the choice of input suppliers for businesses
For all industries, suppliers always put certain pressure if they have the scale, a set and the ownership of scarce resources Therefore, the provision of small input products (farmers, craftsmen etc.) will have very little power to negotiate with businesses even though they have large numbers, they lack organization
e The ability to force the prices of the buyers (customers):
The trust of customers is valuable asset which ts very important to enterprises
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CjIRICjCjS Team 3- Class GaMHADTCOTTI Thesis — Subject: Strategic Management
Customer is a competitive force that can directly affect to the entire industry's production and business activities
Customers are classified into two groups 4) A? ¢ ge 7 c
+ Retail customers
+ Distributors
Both groups put pressure on businesses in terms of price, quality of products and services respectively and they are the ones who control competition in the industry through the purchasing decision
Similarly to pressure from suppliers we consider the impacts on the competitive pressure from customers to industry
+ Seale
+ Importance
+ Customer switching cost + Customer information
Especially as analyzing distributors, we have paid attention to the importance of them; they can directly go into the internal side of the business
e Risk of replacement:
Substitute products and services are the products and services that can satisfy the needs equivalently to products and services in the industry
Main competitive force of replacement is the ability to meet the demands compared to other products in the industry, moreover are the factors of price, quality, other environmental factors such as culture, politics Technology will also affect the threat of substitute products
Sudden, unpredictable level of substitutes) Even in the industry with the development of technology, it can also create alternative products
Substitutes limit the potential profits of the industry by setting the maximum threshold for the price that companies in the industry can be profitable
¢ Competitors in the industry: This is regularly pressure threaten directly to the enterprise, as the more increasing the pressure of competition between businesses 1s, the more position and the existence of the business ts threat
Businesses existing in the industry will compete directly with each other creating
pressure back on the industry to create a competitive strength In an industry, the
following factors will increase competitive pressure of rivals:
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+ The situation of the industry) demand growth number of competitors ete
+ The structure of the industry) concentrated or distributed industry
` ‘
‘the distributed indust’y is the one at here die su indy busifesses compeuiay wiih
each other but no business can afford to dominate the remaining businesses
Concentrated industry: Industry that has only one or a few enterprises holding a
dominant role (Control the competition - considered authorization)
+ Retreat barriers (Exit Barrier): Like the entry barriers, retreat barriers are the
factors which make the withdrawing from the industry become more difficult: Barriers on technology investing capital
Binding with workers
Binding with the government, relevant organizations (stakeholders) Binding of strategy and plans
1.2.1.2 Internal environment of business:
Internal environment includes factors inside business which are able to be controlled such as marketing, administration, accounting finance, human resource, development research, production and operation, information system Analysis of factors inside businesses will help them to identify the strengths and weaknesses to
determine a reasonable strategy to exploit the strengths and overcome weaknesses
The points need to be analyzed are as follows:
- Administration: Analysis of managing activities through the functions of planning, organizing, leading and controlling
-Marketing Marketing is described as the process of identifying, forecasting, setting and satisfying customers’ needs for products and services The basic content of the marketing is to research and analyze market volume
-Accounting Finance: Analysis of the financial situation of business through financial indicators such as: solvency, leverage, earnings ratios, growth index, etc identify strengths and weaknesses of the financial competency of business
- Human resource: The role of human resources is very important to contribute to the success of the business Human resources help business to implement strategies more effectively And in the contrast, if there are no proper human resources to implement the strategy, however the strategy is good, it cannot bring effectiveness for the business To assess human resources we will evaluate the primary job of the
human resources management of a business such as the recruitment training,
assessment and reasonable allocation of the right people in the right job
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ax ie Peam 3- Class GaMBAOL COLT Thesis — Subject! Strategic Management
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- Production and operations: Analysis of the production -operation process
through five types of decisions as the production process capacity, inventory labor
force product quality
- Research and development (R & D): Analysis and assessment of research and
development through activities to develop new products improve product's quality, improve production process good price control and last but not least 1s to improve the competitiveness of businesses
- Information System: Information systems reviewed and evaluated includes all the means to receive, process and communicate data information for both inside and outside of the enterprise to support the implementation, evaluation and controlling of the business activities In the process of implementation of the strategy to achieve the long-term goal, the business can be divided into many short- term goals corresponding to each shorter time period
1.2.2 Determine the goals of the business
The target is the desired outcome of the business set out in a relatively long time The target of business is to concretize the content, the mean to carry out the mission of the enterprise
Planned targets depend on conditions inside and outside, in each stage and consistent with the mission of the business Study target is the premise, the basis for the formation of strategy The target set is not far from reality The targets indicate the ending point of the strategic tasks, as a basis for determining the order of priority in the allocation of resources
1.2.3 Develop strategy, choose key strategy
The development of strategies for business is made on the basis of the analysis and evaluation of the business environment, identify opportunities and risks affecting the survival of the business Thereby, determine the strategic plan to achieve goals The formation of strategy requires creating harmony and combination of factors affecting to strategy Strategy is developed basing on the analysis and evaluation of the business environment and use these tools supporting strategic planning On that basis business chooses key strategies highly feasible and optimal for the development, and is the target to pursue
Therefore, developing strategy 1s: Unique proposal
Value chain that make difference from competitors
Clearly agreement determine what to do and what not
Constant in positioning
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vent Team 3- Class GaMBAOT COLT Thesis — Subject: Strategic Management
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1.3 Supporting tools for identifying, selecting strategies
To carry out strategic planning we can apply many methods and various planning
tools This topic only selectively uses some common tools introduced below which
We believe they will be useful for planning development strategy of
VIHAFOODCO
1.3.1 The external factors evaluation matrix tool - EFE
The external factors evaluation matrix tool — EFE help to summarize and quantify the effects of environmental factors to the business Developing an EFE matrix Is as same as the internal factors evaluation matrix tool consisting of five steps:
+ Step 1: Make a list of the factors that play a decisive role for the success as identified in the macro environmental assessment process List includes Opportunities and threats affecting the business and the business field of the enterprise
+ Step 2: Classity the importance from 0.0 (not important) to 1.0 (key importance) for each element This classification shows the respective importance of the factors for the success of the business in the industry The appropriate classification can be determined by comparing the successful business with failed businesses in the industry or discuss and reach consensus of the strategy group Total classification levels must be equal to 1.0
+ Step 3: Classify from | to 4 for each factor determining the success to show how the current strategy of the business responses to this factor That 4 is a good response, 3 is above- average response, 2 medium and | is weak These levels are based on the efficiency of the business strategy
+ Step 4: Multiple the importance of each factor with its classification (=step 2 * step 3) to determine the points of importance
+ Step 5: Add the total points of importance for each variance to determine total important points for the organization
Regardless of the number of opportunities and threats in the matrix, the highest total score that a business can have 1s 4.0 the lowest 1s 1.0 and average 1s 2.5
Total important points are 4.0 showing the strategy of enterprises that make good use of external opportunities and minimize the negative impact of the external environment to the enterprise
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sean saan ner snimnnannate
Table 1-1: The external factors evaluation matrix tool - EFE
| ¢ lassification |
Fvternalimportant factor | Traportance |
fist) the mam threai
O/2OFHHHHIICS inside
HUSTINESS
Total 4,
1.3.2 The internal factors evaluation matrix tool — IFE
Internal factor evaluation matrix tool is the tool which allows evaluating the strengths weaknesses and the importance of the functioning departments of the business Internal factor evaluation matrix tool 1s also implemented in five steps: + Step 1: Make a list of key successful factors as identified in the internal audit process
+ Step 2: Classify the importance from 0.0 (not important) to 1.0 (very important) for each factor This classification shows the relative importance of each factor for the success of business in the industry Total this important level must be 1.0
+ Step 3:Classify from | to 4 for each factor, including: | represents for the biggest weak point, 2 Is the smallest weak point, 3 1s smallest strongpoint, 4 is the biggest strong point Thus, the classification 1s based on business
+ Step 4: Mollify the importance level of each factor with its classification (= step 2 * step 3) to determine the number of points of importance
+ Step 5: Add the total number of points of importance for each factor to determine the total number of points of importance
Table 1-2: The internal factors evaluation matrix tool - IFE
CG Global Advanced \’
Internal important factors Importance Classification Score
Vlake a list of kev successful
factors inside the business
Total 100
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RK ( ` Team 3- Class GaMBADTCOTTI Thesis — Subject: Strategic Management
1 Cy 1
Advantages: Forming the overall picture of the business with the particular strengths and weaknesses that affect the competitiveness of enterprises
Restriction: The scoring for each factor as well as determining the importance level
of the subjective factors
1.3.3 CPM - Company Profile Matrix tool
Establish Matrix Company Profile Matrix to make comparative evaluation of companies with major competitors in the same industry, the comparison ts based on the factors affecting the competitiveness of companies in the sector Through it to the Administration recognize the strengths and weaknesses of the company with competitors, identify competitive advantages for the company and weaknesses need to be overcome To build a Company Profile Matrix need to perform the following steps:
+ Step 1: Make a list of the main factors have a significant impact on the competitiveness of companies in the sector
+ Step 2: Classify the importance from 0.0 (not important) to 1.0 (very important) for each factor This classification shows the competitiveness of the industry Total this important level must be 1.0
+ Step 3: For each factor, this point represents the response of the business In particular, 4 is the best response, 3 1s the point response on average, 2 1s the average response, and reaction of | is the poor
+ Step 4: Get important points of the elements of each business multiplied by the rate of the industry has been a result of the competitiveness of enterprises
+ Step 5: Evaluate the results Do business with the highest total score is the most
competitive compared with other firms in the industry
Review: Compare the total number of companies with major competitors in the industry to evaluate the competitiveness of the company
Advantages: form a comprehensive picture of the competitiveness of enterprises compared to other competitors in the industry
Restriction: The scoring of each factor as well as determine the level of importance of the subjective factor
1.3.4 SWOT matrix tool
SWOT matrix evaluates the strengths, weaknesses opportunities and threats The purpose of the study of the environment is to identify threats and opportunities as Well as the strengths and weaknesses that business 1s and will face in the process of
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business activities as a basis for strategy planning for the business SWOT matrix 1s an important tool for the synthesis of the results of environmental studies and
proposal strategies
- Main opportunity: the chance that the product between the impacts on the
business as it ts to take advantage and the probability that enterprises can take advantage of that opportunity is huge
- Main risk: the risk that the product between the level of impacts as the risk for enterprises and probability achieve the greatest value
- Identify the strengths and weaknesses: the evaluation and analysis process inside of enterprises draws a lot of factors, but it is important to draw the core factors that affect the competitive position and the implementation of business strategies It should consider these factors as the operation in system and comparison with the general standard of the industry and competitors
Link internal factors with external conditions: after determining the basic elements of the inside and outside, it is necessary to apply a process including the following steps to analyze and proposed strategies:
+ Step 1: List the major elements inside and outside the business to the cells of the SWOT matrix (SWOT stands for of four letters: Strengths, Weakenesses, Opportunities, and Threats)
+ Step 2: propose the matching pairs logically, make combinine strategies: ¥ S/O: Use your strengths to exploit the best external opportunities? v S/T: Use strengths to deal with external threats?
¥ W/O: Overcome weaknesses to create good conditions for taking advantage of external opportunities? Need to exploit the opportunity to gradually
overcome the current weaknesses?
¥ W/T-: Overcome the current weakness to reduce the risks?
+ Step 3: Provide a combination of four factors S + W + O + T to create a resonance between the four elements to form a strategy through which help businesses to use its strengths to best exploit opportunities, gradually overcome the weaknesses and
reduce risk
+ Step 4: Synthesis and reviewing strategies Grouping strategy and _ strategic collaboration for system supporting each other
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SWOT
Table 1-3: SWOT Matrix
Onnortunities (QO)
——————
Threats (1)
Strengths (S) Solutions (SO) Solutions (ST)
Se SUPCHUAS to take advantages of Use strengths
2 opportunity to overcome threats
Weaknesses (W) Solutions (WO) Solutions (WT)
| Reduce Reduce weakness to take advantages of
2 opportunity to overcome threats That:
Y SO strategy - "development" strategy: Combining factors of opportunities and strengths of business to carry out expansion and diversified development
Y WO Strategies: The weaknesses is more than strengths but external opportunities are dominant, corresponding to the name of "competition" Y ST Strategy: This is a situation the company to use inside strong conditions
to resist the external obstacles conditions This strategy is called the "Resistance" strategy
Y WT Strategy-"Defense": The company does not deal with external threats, deprived of the ability to grow In this situation, the company only have 2 directionsare bankruptcy or association with other companies
1.3.5 QSPM Matrix Tool
QSPM Matrix is an effective tool that allows experts to assess objectively the strategies selected QSPM matrix requires keen and correctjudgment experts
or Global Advanced \"
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/
+ Step 7: List the lagre external opportunities / threats and internal important weaknesses / strengths in the left column of the QSPM matrix
Step 2° Classify each ertical successful factor outside and inside the business + Step 3:Study the matrix in the second stage (combined) and identify the strategies can be replaced that organizations should consider to implement
+ Step 4: Determine the number of attractive points (AS):
= not attractive 2 = less attractive
3 = attractive 4 = very attractive
+ Step 5: Calculate the total attractive points (TAS): the higher total attractive points are, the more attractive strategy is (in terms of critical successful factors on the next side)
+ Step 6: Calculate the total attractive points It is the sum of the total attractive
points in the column of QSPM matrix
In addition to the above tools, in the process of developing strategies for business, it is necessary to use some additional methods such as expertise method, customer’s opinion survey methods combined together to plan the most efficient strategy
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Trang 27he Team 3- Class GAMBAOI! CO) | | Thesis — Subject: Strategic Management
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CHAPTER 2
OPERATING ENVIRONMENT OF VIHAFOODCO COMPANY
2.1 Overview on the VIHAFOODCO:
2.1.1 Establishment legality:
Company name: Hanoi Food Import — Export Joint Stock Company International transaction name: Hanoi Food Import — Export Joint Stock Company Abbreviated name: VIHAFOODCO
Address: 84 Quan Thanh — Ba Dinh — Ha Noi
Tel: 84 — 4 37150371 / 37150321
Fax: 84 — 4 37150328
Email: vihafoodco wynn.vn
Website: http://namdo.com.vn/
Decision on the establishment: No.4435/QD-BNN-TCCB dated Dec 9", 2004 of the Minister of Agriculture and Rural Development
Charter capital: 30 billion VND, Including:
» State-owned Capital: 15.3 billion VND, equivalent to 51% of the charter capital >» Capital contributed by other shareholders: USD 14.7 billion or equivalent to
49% of the charter capital
The company has 07 dependent accounting units, including: > Food Trading Branch
>» General trading Branch » High quality rice Branch
» Hoan Kiem Trading Branch
> Dong Da Trading Branch
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> A1n(Ciang Branch
» Tourism services Branch
Business lines:
» Trading of food Agri-products forest’ products, seafood Agri-processed
products, animal feed industrial products, consumer products, fertilizer building materials, household appliances
» Milling and processing food and agriculture, forestry,
>» Cultivating plant and feeding seafood
» Trading of hotels, guest houses, restaurants, etc
» Wholesale, retail and agents of alcohol, non-alcoholic beverages, cigarettes
2.1.2 The process of formation and development:
The predecessor of the company 1s state-owned enterprise as Hanoi Food Company - a member of the Northern Food Corporation which is equitized and put into operation in the model of Joint Stock Company on Apr 1“, 2005
Activities of the Company specialize in the production and processing of food, agricultural products, and the services sector for the people's lives of the Hanoi capital
With the target of expanding and constantly developing, the Hanoi Food Import and Export Joint Stock Company are willing to cooperate, joint ventures with other domestic or foreign units and individuals
Certificates:
> The Third —Lass Labor Order awarded by the Stat
> The merit certificate of the Government, the Ministry of Agriculture and Rural Development, Northern Food Corporation
> The Golden Cup of the typical enterprise 2003 in Vietnam Business Fair towards the Thang Long thousand years (organized by Vietnam Standards and Consumer
Protection Association)
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»_ K, Team 3- Class GaMBAOT COLT | | hesis — Subject: Strategic Management
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ry the Merit Certificate of the Hanot People's Committee for the typical enterprise
thai contributed to the success of the Internanonal Trade Fair in Hanot EXPO 200
» Golden Medal of the Vietnam International Trade Fair EXPO 2006 for the
products such as: Tam Xoan, lam Dien Bien, That's King
» Golden Medal of the Vietnamese brand for high-quality rice products of food safety: Tam Xoan Hat Hau, Tam Dien Bien Bac Thom, Nep Cai Hoa Vang, That's
King
» Golden Cup of reputable enterprise, enterprise quality of the Vietnamese brand
in 2006
» Golden Cup of the Hanoi Typical enterprise in 2006
» Gold Medal of the Vietnam International Trade Fair EXPO 2007 for the product of Nam Do - Gold Label
2.1.3 Organizational structure:
Board of Directors and Board of Supervisors are elected by the General Meeting of Shareholders of each annual general meeting of shareholders with administrative
tasks of operating companies under the company charter
Director and Board of Directors consist of four people appointed by Board of Directors with the task of managing and operating activities of the company to comply with the company and the target, policies outlined by the General Meeting ot Shareholders and duties entrusted by the Board of Directors
The operating organization includes:
» Assistant division for the Board of Directors >» Board of Supervisors
> Factory
» Sales Division: including the Market — Sales Department and branches of
business implementation and product consumption of the Company
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⁄ Team 3- Class GCaMHAOUTCOTITI | hesis — Subject: Strategic Management
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— =— spec ee SE ES ea oe
” Support Department: including Finance and Accounting Department, Department of Administration and Organization and Construction Management Department
MANAGEMENT SYSTEM-GENERAL MEETINGOFSHAREHOLDERS
BOARD OF DIRECTORS- ASSISTANT DIVISION FOR BOARD OF SUPERVISORS PRESIDENT BOARD OF DIRECTORS MANAGER + 2 MEMBERS 4 MEMBERS 4
MANAGEMENT SYSTEM -ADMINISTRATION DIRECTOR J
SALES DEPUTY DIRECTOR PRODUCTION DEPUTY FINANCE DEPUTY DIRECTOR
SALES-MARKET BRANCHES ADMINISTRA- FINANC- CONSTRUCTION
DEPT TION AND ACCOUN- INVESTMENT
ORGANIZATIO TING DEPT FACTORY
Source: VIHAFOODCO's Documents
Figure 2-1: The structure of organization, management and operation of the VIHAFOODCO
The total number of employees of the Company is 290 people including staffs who stick to the company from the beginning of establishment are up 40% of the total number of employees Strengths of the company are that employees have high solidarity, dedication and loyalty to the Company However, direct manufacturing
labor force is mainly unskilled workers
2.1.4 Production capacity:
With a rice-processing factory under the export standard and warehouse in Chau
Doc, An Giang, the production capacity of the company by the year 2012 1s
specified as follows:
e §=Processing capacity: 80.000 - 90,000 tones / year
e Paddy storage capacity of the warehouse: 5.000 tons of paddy
Trang 31` ⁄% SN Team 3- Class GAMBAO! COLT] Thesis — Subject: Strategic Management
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e §=6Rice storage capacity of the warehouse: 7.000 tons of rice
e =Storage conditions in the warehouse: 6 months
e Peeling line 11 tons of paddy / hour
e Lines for polishing and whitening | 10-12 tons of rice/hour
Capacity targets:
e The total capacity: 190.000 tons/year -
e Source:
VY Self-production: 90.000 tons/year
Y Purchase outside: 100.000 tons/year e Total warehouse area: 8.000 m°
e The total capacity of paddy and rice warehouse: 12.000 tons
Although the factory capacity and storage system 1s at the average, with the system of the milling equipment, special-purpose polishing and polishing of rice production, in addition to acquiring and continuously updating new technology, VIHAFOODCO increasingly create value and product quality to fully meet the standards for rice export
e The process of rice processing:
Paddy i JMlj[HfIf
Rice Broken rice Bran
*
Polishing Ỷ
v * w
Finished rice Broken rice Bran
-
Pecking
Ware1ousing
Source: VIHAFOODCO's Documents
Figure 2-2: The process of rice processing in the factory
Trang 32` /s Feam 3- Class GaMBAOL COLT Thesis — Subject: Strategic Management
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2.2 Analysis of the external environment (EFE), identify opportunities and risks affecting the business activities of the company:
2.2.1 Macro environment:
2.2.1.1 Political environment, policy and law:
» Political and security situation is relatively stable now
» The legal system is being amended increasingly in accordance with the
development of the economy
> After five years joining officially the WTO (Jan 11“, 2007), Vietnam's legal environment has changed in many areas In general, Vietnamese legal
environment is expanding to the field of social adjustment However according
to the rule of respecting the law of the WTO, Vietnam's legal environment ts still problematic, among them, the most prominent problem is that we still do not
have enough legal sanction and legislation construction quality 1s still too low
2.2.1.2 Population, social and cultural environment
Vietnam is a populous country with more than 87.84 million people (census in 2011) and is the 13th most populous country among the world's most populous countries The annual population growth rate is about 1.57% on average, so the momentum of population growth remains high and will be maintained in many years According to the coming forecast, Vietnamese population will continue to increase to the mid-21st century
Table 2-1: Average population by urban and rural areas over the years 2007 to 2012 *
Norm Calculation unit 2007 2008 2009 2010 2011
1 Population Million people 84,218.50 85,118.70 86,025.00 86,932.50 87,840.00
2 Town Density 28% 29% 30% 31% 32%
3 country side Density 72% 71% 70% 70% 68%
Source: General Statistics Office of Vietnam
According to the table above we can see that the labor force and labor market are
mainly in cural areas Despite rapid urbanization 70.4% of Vietnam's populations
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live in rural areas, having low-income primarily from agriculture so it also influences economic policy and supply sources of compantes
2.2.1.3 Technology environment:
Ihe research and application of science and technology is the urgent requirement
for any businesses today but the number of businesses doing so is not many
According to the survey results of science and technology activities in the business
of the Department of Science and Technology in general, there are tew high
technology businesses Most businesses are using outdated technology Many machines, equipment, technological chain are old, patchy and asynchronous
Workers are low skilled Therefore, product competition in the market 1s weak
Management level of enterprises have not been renovated and upgraded, only a small percentage of enterprises apply advanced quality management system such as:
ISO, SA, HACCP and so on
In the context of Vietnam's accession to the World Trade Organization (WTO),
technology is considered the most powerful competitive weapon Technological innovation will create more advanced products, better product quality, higher
productivity, lower production costs, lower product costs, better competitive
advantage in the market
Rice processing industry has developed rapidly in recent years However, most of the processing of rice in the country today 1s just in the milling process, sorting and packing, hardly carries out the complete process including size sorting, polish and dry Processed rice quality is low, value added in processing rice 1s not much, just contribute about 19 - 20% for value added / ton of rice while in Thailand, it 1s 26% Losses after harvest (including harvest, transport and processing) are still large, accounting for about 11 - 12%
Trang 34SN Team 3- Class CGaMBAODT COTTT — Thesis - SubJect: Stratepic Management
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= an nan
2.2.1.4 Economic environment:
Based on the result of the first 9 months of 2012 and the estimated result in the last months of the year, the Government has made specific assessment of the economic situation in 2012 as follows
> Inflation 1s initially curbed, consumer price is up 5.13% in 9 months In the last months of the year the government will take measures to keep annual inflation rate of about 8%
> Compared to the beginning of the year interest rates have fallen The rate of credit to the agricultural sector and rural areas increases Liquidity of the banking system has been improved Deposits increase by 12.7% Stable exchange rate and
strengthened confidence in Vietnam currency have helped reduce to use foreign
currency or gold as a means of payment in the country Exports rose 18.9 percent, bringing $ 83.79 billion; imports rose 6.6%, bringing $ 83.76 billion It is estimated that annual exports increase 16.6%, imports increase 6.8%, trade gap 1s about $ | billion, equal to 0.9% of exports turnover Foreign currency reserves increase and reach over II weeks of imports; international balance of payments surpluses $ 8 billion
>» Budget revenue reached 67.3%, 71.2% of budget expenditure is estimated With positive signs of the end months of the year, it is forecast that annual budget revenues meet the target ensure to keep the budget expenditure and over budget expenditure at 4.8% of GDP, achieve the National Assembly’s target
> “he total investment fund for social development is estimated at 29.5% of GDP (in 2011 it is 1346%)Many remedies to solve difficulty are made, business situation is gradually improved Inventory reduces The number of businesses stooping or dissolving has reduced but ts still high compared to the same period of las: year The number of newly registered [3] enterprises has increased but 1s still lower than last year
> ndustrial production increases gradually over each quarter Industrial
prcduction index of the first 9 month rose 4.8%, annual increase 1s about
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5.3%, Mining and manufacturing industries that cause pollution consume less energy than the average Many foreign invested enterprises applying high technology strongly develop exports
>» Agriculture, forestry and aquatic production continued to grow and play a very
important role in stabilizing the economy and rural life Export value of the entire sector during 9 months rose 3.7 percent and 1s estimated at about 3.9% for the year Yearly rice yield was estimated 43 million tons, increasing about | million tons in comparison to 2011 About 7 million tons of rice was exported, reaching the highest level compared to previous years Aquaculture increased significantly, yearly export reached $ 6.5 billion of total $ 26.5 billion export of the entire industry (in 2011, the
number is $ 25 billion)
» The service sector grew higher than the overall growth of the economy Total retail sales of goods and services of the first 9 months increased 17.3%; if excluding the price factor, the sales also increased 6.7% The yearly sales are estimated to increase 18% Annual tourism revenues increased over 15%; the number of international tourists coming to Vietnam increased over 8% Passenger
transportation volumes increased 12.1% and 13% for the entire year; post and
telecommunications continue to thrive
» Economic Growth of the first nine months reached 4.73%, and about 5.2% for the whole year That was lower than target but the subsequent quarter was higher than the previous quarter, inflation was controlled, macro-economy was more stable All are positive signs for sustainable development in the future
(From " Government's Report on social-economic situation in 2012 and tasks in
2013 that Prime Minister Nguyen Tan Dung presented at the opening session of the
fourth meeting of the XIII National Assembly, October 22, 2012)
Related to rice industry policies from the beginning of the year, the government has
two times decided to purchase rice in the Mekong Delta to store temporarily at the
request of the Vietnam Food Association (VFA) and ministries Specifically, the first ime was done from 15 March to 30 April with a volume of | million tons of
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rice to rescue the winter-spring crop market The second time was done from 15
July to 15 August with a volume of 500.000 tons of rice of summer-autumn rice However, it Is obvious that policy in the past did not achieve the purpose of
ensuring that rice farmers make a profit of 30% or more as at the time of rice
stockpiling purchase, rice prices also inched up slowly: 50-100 VND / kg even the price drop or remain unchanged " Quoted from the article "Proposing solutions to
replace temporary rice storage" by Huu Thong (Vietnamese Newspaper)
Thus we can see that: temporary storage policy in recent years ts to regulate the market and harmonize interests of the people businesses as well as the State However, when applying this policy, only few businesses are beneficial The farmers almost received no benefit at all and the risk to capture the market of some business: "buy rice from farmers at "knockdown price" 1s possible but sell at high
price.”
On Aprill6", 2012, the Prime Minister issued Decision 439/QD-TTg 2012 which approved list of national products done from 2012 under the National Product Development Program to 2020 Among them, "highly qualitative and productive Vietnamese rice products" are in top priority Decision issued required businesses to stand side by side and support farmers’ right from the production stage, not distribution stage It 1s one of the radical solutions to industrialize production value chain, terminate term of export "raw agricultural products", and create Vietnamese rice brand to be worthy of "national product list"
2.2.2 Micro Environment:
2.2.2.1 The world market:
>» World rice production situation:
According to the U.S Department of Agriculture (USDA), global rice production in 2011-2012 was 465.4 million tons, up 2.65 million tons from the previous forecast and increased 3% compared with the rice production in 2010-2011 due to the global
harvested area increased Production is forecast to grow in countries) Myanmar,
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fo Team 3- Class GaMBAO] COTT] Thesis — Subject: Strategic Management
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India Malaysia Egypt, China Pakistan the EU Colombia Nigeria, Australia, Indonesia and Sri Lanka
Million tons sài
Million ha 490 + 165 470 † | Ƒ | + 160 450 LJ Production —— Area | | 430 | | đến 410 + 150 390 | 370 | Ỉ MS 350 +t 140 BF oF oF V FF _ GF oF ES SW SKM MK PM GT GM PD HG GY 9
Source: U.S Department of Agriculture (USDA)
Figure 2-3: Global rice production from 2000 - 2012 * (million tons)
Philippine rice production in 2011/12 is forecast to decline 84 thousand tons, and
gain 10.6 million tons
Annual global consumption in 2011/12 is forecast at 462.9 million tons, up 3.0 million tons compared to the forecast made last month Consumption is forecast to increase in countries such as Myanmar, India, Nigeria, Bangladesh, China, Thailand
and Vietnam
In addition, consumption 1s expected to decline in Brazil; Ecuador; the Philippines
and the United States
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tế Feam 3- Class GaMBAOT COLT Thesis — Subject: Strategic Management
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Million tons Rate
480 5 - 40
HO + ig [ Consumption = Store/consumoption rate _ 7+ 35
` \ , | | + 30 40 + 7 | | | | ||+3s | 420 + | ] 1+ 20 FT] | of] f | | | | | | | | t IS 400 + [ PL} " | Ì i | | | \ | ị | | ị i of j j Py yd ddd ‡ { Ị |! | | II} | i }Ị ‡ |I210 + | | | | | | | Ị | | | LỊ 380 | hid | | | | il | Pio of 4 | | | | | | i | 360 44 ji L1 } i Ì i 14 i } 4 0 ` ọ > > 2 wa * ° ) ` 4 S ` `t ` ^ ` + v ` xà k eh Sw PK PK HK ODM HSK oD 7 ⁄ 4 ⁄ Lá ¢ “ # ⁄ # “
Source: U.S Department of Agriculture (USDA)
Figure 2-4: Rice consumption volume and reserve/consumption rate in the world throughout the years
Global reserve in 2011/12 1s forecast to reach 100.3 million tons, increasing 0.2 million tons from the previous forecast and is 3% higher than 2010/11 Reserve is forecast to rise in Cambodia, Colombia, Malaysia, China, India and Thailand Reserve 1s forecast to reduce in countries of Brazil, Indonesia, the Philippines and
the United States
' World Rice Trade: According to the forecast in December 2012 of the U.S Department of Agriculture, the global trade in 2011-2012 was 38.51 million tons, increasing 0.3 million tons from the previous forecast, and increased 6.3% compared to crop 2010-2011
* Exports: The rice exporting volume of the major rice exporting countries in 2012
is estimated to increase during 2011-2012 and decline slightly in crop 2012-2013
Thailand's rice export in 2011-2012 is estimated to reduce 4.0 million tons from the season 2010-2011, reaching 6.5 million tons, Brazil's rice exports is estimated to fall 96 thousand tons, reaching |.2 million tons tn the crop 2011-2012 The decrease is due to limited supply Exports are also forecast to decrease in Argentina and a number of other countries In contrast Australia, Egypt, India and Pakistan are
forecast to increase export during 2011-2012
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Table 2-2: Rice export of some of the world's major countries over the years 2006-201 3*
GLOBAL EXPORTS BY COUNTRY
2011/12 / 2012/13 1 REGION 2/0546 200607 200708 200809 200910 201011 vov 0c | NOV DẸC
Thousand \ietne Tons
World 29,102 31,927 29,578 29.401 31,546 36214 36209 38,509] 36.068 36,115) Argentina 487 436 408 S94 468 732 674 674 525 525 Australia 317 199 4 17 4 3 40 40 S00 — 400 Brazil ĐỒ ks 0 0 1296) 1200 120) 800 8 Burma 7 lỒ 4Í 102 4G 769 700 700 600 Cambodia 300 4Ĩ 3C 60 760 860 $0 §00| 940 9 China 1216 1340 96 "83 619 487] 400 40, 400 5 Egypt 958 1Ð 016 90 30| 600 600 §50 §§
EU-272 M“ l3) MƠ l0 2 ĐÐEỢỤ 10 0E 28S 235 India 4537 6301 3383 219 2,228 4632| 10000 10000 6500 6,
Japan 0D 2100 200 20 2/00 20 20 20 20 2 Paldstan 3579 2,696 360M 3190 (00 3,414] «3,780 3250| 4000 4 Thậand 7376 9557 10.011 8870 902 1060| 6400 6400| $Đ000
US 3,306 3,025 ô3,267 ô3,017 3,868 3,247] 330 3,300] 3390 Uruguay DO ƠO MƠ 906 008 SH, 100 1060| 860 §
Viemam 4705 4592 4649 5950 674 7,000 7200 7,500} 2000 7, Others lỔ 886— 97 00 102 10) 1,174 T14 1205
* Revised: Highlighted & Bold
V Forecast
2/ Exchading intra-E.U trade
Source: U.S Department of Agriculture (USDA)
* Import: According to the forecast in December 2012 of the US Department of Agriculture, import demand of the world in 2011-2012 reached 35.931 million tons (an increase of 6.55% compared to 2011) but tend to decrease slightly in the import forecast in 2012-2013
The main importing countries are Asian countries such as Philippines, China, Indonesia, Iran, Iraq and other countries in Africa
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CG W 3 Team 3- Class GaMBAOL COLT Thesis — Subject: Strategic Management hia
Table 2-3: Some largest rice-importing countries over the years 2006-2013 *
| GLOBAL IMPORTS BY COUNTRY
y/ Region 3W 2U 200/06 260W 910 201011 Nov 2112 A DEC NOV 201213 DEC
pe Thousand Mem Tons _
Bangladesh 83] 170 1 688 146 660 1 486 340 240 250 280 Brani 691 6M4 + 6X ws 891} “20 “20 T&0 $0 ESL 2 tụ 368 361 42 401 38 373 Mỹ 408 398 China 684 + 20 33° 366 gr 260) 2,600 2.000 2,000} Cuba 894 vy a8 45° 498 š§§ i $25 $25 E273 cal 1342 1420 1383s 1216 1474 1.200 1,200 1 400 ] 400 Indonesia 839 2.000 340 240 1.10 3.098 1.700 1.700 1.440 Iran 1.400 1 460 1430 140 1420 1.870 1 900 1, 1 99 Iraq 1277 773 rs 1.089 1.188 1.036 1.240 2 1 340
hon Coast eit) $0 §00 $00 $40 938 1300 1300 980
Japan 681 680 §33 740 649 697 "00 “00 "00 Malaysia 886 “99 1,039 1.086 907 1.076 1,088 1,085 1,040 Mexico 588 0” 578 610 575 70 640 640 725 Nigeria 1,600 1,580 1,800 2,000 2,000 2,550 3200 3,200 2,250 Philippines 1.791 1.900 2.00 2.000 2.400 1.200) 15 1,800 1,500 S Arabia 958 961 1,166 1,072 1,069 1,089 1,150 1,150 1,225 Senegal 600 700 860 78 685 80s 1.200 1,200 20 S Africa 806 960 680 748 733 $85 980 %0 1.000 US 633 698 68) 682 562 621 610 640 700 Others 969 10,410 10.348 10.376 11,121 12,164 13,183 13,198) 13912 World 26,500 29,488 28,489 27,030 29,318 33,721 36,036 MT 30 3
* Revised: Highlighted & Bold
1 Forecast Former Soviet Union, excledes Baltics
P Exclading only intra-E.U
Source: U.S Department of Agriculture (USDA) * World rice prices:
Besides the increase in export prices of Thai rice, rice exporting prices in other rice exporting countries in the world tend to decrease
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