BUSINESS STRATEGY OF nha be garment corporation

. Concept, role of business strategy in company business operation The process of company strategic management formulationBuilding up strategy optionsBUSINESS AND MANUFACTURE OPERATION SITUATION OF NHA BE GARMENT CORPORATIONADVANTAGES AND DISADVANTAGES OF NHA BE GARMENT CORPORATION IN PRODUCTION AND BUSINESS OPERATION BUSINESS STRATEGY OF NHA BE GARMENT CORPORATION TOWARDS THE YEAR 2011 AND SOLUTIONS TO IMPLEMENT STRATEGIES

BUSINESS STRATEGY OF

NHA BE GARMENT CORPORATION

8

8

2.1 Method of statistics collection:

8

2.2 Method of comparison and synthetic:

9

2.3 Method of listing in chart and table:

9

2.4 SWOT method:

9

9

9

CHAPTER 1: THEORY BASE OF BUSINESS STRATEGY

1.1 Concept, role of business strategy in company business operation 10

10

1.1.2 The role of business strategy in company business operation: 11

1.2 The process of company strategic management formulation: 12

1.2.1 Identifying mission and objectives of company: 12

13

14

1.2.2.2 Micro environment (industry environment): 16

19

19

20

23

1.2.5 Building up strategy options: 23

23

26

26

19

1.2.8 Monitoring and evaluating strategy implementation: 27

CHAPTER 2: BUSINESS AND MANUFACTURE OPERATION SITUATION

OF NHA BE GARMENT CORPORATION

2.1 Introduction of Nha Be Garment corporation:

28

32

2.2 Analyzing business operation result situation in recent years: 33

2.2.1 ADVANTAGES AND DISADVANTAGES OF NHA BE GARMENTCORPORATION IN PRODUCTION AND BUSINESS OPERATION : 37

37

38

2.2.2 Development Orientation towards the year 2011: 38

39

2.3.1 Business environment factors:

39

39

39

43

c Socio-cultural factor: 44

45

46

2.3.1.2 Micro environment (industry environment): 47

47

51

52

53

54

a SO Strategy :

59

b ST strategy:

60

c WO strategy :

60

d WT strategy :

61

TOWARDS THE YEAR 2011 AND SOLUTIONS TO IMPLEMENT

STRATEGIES

3.1 The business strategy of the Corporation up to 2011

62

62

64

64

65

65

69

3.2 SOME SOLUTION FOR IMPLEMENTING BUSINESS STRATEGY OF

73

73

74

3.2.5 Human resources measure: 78

CONCLUSION

81

LIST OF TABLES/ CHARTS

Chart 1.1 The five competitive Forces that shape Strategy .16

Chart 1.2: SWOT matrix model

22

Chart 2.1 Organization structure of Nha Be Corporation

29

Table 2.2 Business operation results of company in recent years (

2005-2008) 34

Chart 2.3 Market share of Nha Be Corporation

35

Table2.4: Garment export market share of Viet Nam (2004-2007)

40

Chart 2.5: Garment export market share of Viet Nam (2004-2007)

40

Table 2.6 : 2002 – 2007 garment material and accessory import

Chart 2.7 The number of garment companies (2000-2007- Source from

General Department of Statistics, 2008 statistics year book)

49

Table 2.8 Competitive capacity of Vietnam and some countries 50

Table 2.9 Competitive capacity of Vietnam and some countries

50

Table 2.10 SWOT Analysis

54

Chart 2 11 The company human resources qualification structure

78

Table 2.12: The proportion of male – female

78

INTRODUCTION

1 Justification:

With characteristics of using huge labor, providing essential demand of the

people, garment industry is one of main industry of Vietnam in economicdevelopment process in current period Vietnam economy is integratingintensively and extensively with the regional and global economy, businessenvironment of companies is opened but the competition is getting more andfiercer This includes both business opportunities and threats for companydevelopment

In the situation with many changes, bypassing accidental factors and tochoose a proper direction and identifying a suitable and timely business strategywilldecide company’s success

From the establishment until now, under the Government management, Nha

Be Garment Corporation has made efforts to use strategic management methods inbusiness management and has harvested good practical results

Recognizing the importance of forming business strategy, I would like to choose topic: “Business Strategy of Nha Be Garment Corporation” with a view to bring theory knowledge into business facts

This topic aims at clarifying some theory issues and methodology mainly

in building up and implementing business strategy of Nha Be Garment

Corporation based on analysis and assessment of the corporation’s businessproduction situation as well as business environment recently

2 Researching methods

2.1 Method of statistics collection

Primary data collection: observing facts in the company, interviewingindividuals (mainly staff of the corporation), etc

Secondary data collection: collecting data from reports, document of thecompany, annual statistics publication, information on media, television and latestresearches

2.2 Method of comparison and synthetic: Comparison between

indicators and planned indicators with business results statistics, marketparameters, other comparative average indicators Comparative condition isstatistics in line with time and space, economic contents, measure unit, counting

methods, business scale and condition

2.3 Method of listing in chart and table: listing and identifying trends

or general characteristics of analyzing factors

2.4 SWOT method: finding out strengths, weaknesses in the corporation This is a key method in forming strategy

4 Research scope:

This paper studies business production operation of Nha Be GarmentCorporation recently and working out business strategy for this corporation in theperiod of 2009 -2011

5 Topic content:

Structure of the topic includes 3 parts:

Part I: Theory base of business strategy

Part II: Business production operation of Nha Be GarmentCorporation

Part III: Business Strategy of Nha Be Garment Corporation towardsthe year 2011 and implementation solutions

We would like to express our sincere thanks to precious and enthusiasticassistance of all the teachers in implementing the topic

CHAPTER 1 THEORY BASE OF BUSINESS STRATEGY CONCEPT, ROLE OF BUSINESS STRATEGY IN COMPANY

BUSINESS OPERATION 1.1 Concept on business strategy and the role of business strategy in company business operation

1.1.1 Concept on business strategy

Strategy: Strategy term derives from Greece with two words “starts”

(army, herd) and “ages” (leader, control) Strategy was used initially in the army torefer master and long term plans based on strong belief in what opponents could

do and what opponents could not do From the 60 decade (of the 20th century)strategy was used in business field and the term “business strategy” was born.However, concept on business strategy is developed step by step and accessed indifferent way

According to traditional concept, strategy concept is understood as follows:

“Strategy is studying to find out a suitable competitive position in anindustry, a main operation scope where competition activities occur.”- by MichealPorter His view on strategy focuses on competitive aspect

According to Alfred Chandler, a professor of Harvard University: “Strategy

is identifying basic and long term objectives of companies, action plans withnecessary sources distribution to carry out these objectives”

Definition of William F.Gluek is: “Strategy is a united, general andcombined plan which is designed to ensure successful implementation of companybasic objectives”

The term “strategy” is usually used in three popular meanings The firstmeaning is the general operation programs and using main sources to obtain

objectives The second meaning is the objective programs of companies, sourcesused for obtaining these objectives, policies for income management, using andarranging these sources The third meaning is identifying long term objectives,choosing operation orientation and allocating necessary sources to obtain theobjectives.

Strategic management: is a process to study current environment as well

as the future one, plan objectives of company; propose, carry out and inspect theimplementation of decision to obtain objectives in present and future environment,strategic management is understood an art as well as a science

Business Strategy: is a future draft including objectives and measures to

obtain these objectives Business Strategy is analyzing, studying and proposing abasic way, drafting development orbit in business production operation; this is acomprehensive, combined and united plan that is examined carefully to help thecompany reach its business objectives

1.1.2 The role of business strategy in company business operation.

Strategic management is like the direction which helps companiesovercome ups and downs in trade market and move into the future with their ownefforts and ability This is really a management science, because if companiesbuild up a good management process, they will have great support for thedevelopment Strategic management relies on opinions that companies keepwatching events occurring inside and outside the company as well as trends tomake changes timely

In the changing condition of the market now, the only thing companiesknow for sure is the change (only thing unchanged is change, in other wordschange is considered as a standard) Fast changes create opportunities and threatsunexpectedly Strategic management assists managers to make plan, build up

strategy to catch, utilize opportunities and decrease threats and risks Businessstrategy is built up so as to help company adapt to changes in long term period

Strategic management helps companies actively foresee their future, allowscompanies go ahead and influences its operation environment; hence enable them

to control sudden changes

Strategic management improves people knowledge Board of directors andstaff understand and commit they will carry out the objectives of company Onceall staff in company understands what their company is doing and why they aredoing so, they will feel they are part of the company and they will commit tosupporting all activities of the company

1.2 The process of company strategic management formulation.

1.2.1 Identifying mission and objectives of company

Mission is main function of company or the answer to the question why thecompany exists

Mission reflects important duty of company for business environment and

is expressed by a short philosophy of company

Mission is the reason for the existence of company, shows the developmentplan of company during existence period Companies can change strategy to carryout their mission but they hardly can change their reason for existence

Vision: main purposes of companies desire to obtain in long term period (1– 5 years)

Objective: is specific, clear, possible objective, in shorter time Objectivespecifies the vision of company

Objective is the ultimate results that company need to achieve Objectiveshows the way to all decisions and forms measuring standards that are proposedfor real implementation

Identifying strategic mission and objectives of company is very important

in the beginning period of strategy business management Company’s success isdecided by clear and concrete objectives

*Principles to identify objective:

- Specific: objective needed to be identified what it relates to; what the

implementation progress is; and what the final results are The more specific theobjective is, the easier strategy planning is Specificness includes quantitycharacteristic of objectives or they need to be identified with specific indicators

- Feasibility: an objective set up has to be feasible, if not it will be

adventurous or counter effective Hence, if objective is too high, executor will bediscouraged and if objective is too low, it will be ineffective

- Consistence: objectives once set up have to be in line with each other so

that realizing one objective will not constrain realizing the other Oppositeobjectives usually cause internal conflict in company, so classifying objectives inorder of priority is necessary However objectives are not totally consistent witheach other, solution should be given to harmonize realizing these objectives

- Flexibility: planned objectives could be adjusted in line with changes of

environment so as to avoid threats and make full use of opportunities However, itshould be cautious to change objectives because these changes may occur withcorrelative changes in related strategies as well as action plans

1.2.2 External environment assessment

The objective of external environment assessment is setting up a brief list

of opportunities that should be grasped by companies and threats, challenges needavoiding

The external environment of company includes macro environment andmicro environment (industry environment)

1.2.2.1 Macro environment

Macro environment analysis gives us a partial answer for question : Whatcompany is dealing with? There are 5 marco environment factors that companyhas to deal with: natural factor, social factor, economic factor, law – politic factor,technological – technical factor Each factor affects company independently ortogether with other factors

a Natural factors

Natural factors include: energy, natural resources, water, environmentpollution, energy shortage, natural resources waste… Natural conditions couldaffect different kind of company, at different level, at different intensity,negatively and positively

b Social factors

All companies have to analyze social factors to identify potentialopportunities and threats Social factors often change or develop slowly and thatmakes it difficult to be recognized Social factors include: life quality, lifestyle,flexibility of customers, jobs, population, resident density, religion…

c Economic factors

Economic factors affect companies heavily, because the range of thesefactors is relatively wide so companies should select to recognize the most specificand direct influences Economic influences include :

- Interest rate: interest rate affects the product demand of company Interest

rate is very important as customers usually borrow money to pay for their goodspurchasing Interest rate decides capital expenditure and so it decides investmentlevel This expenditure is the main factor as making decision on feasibility ofstrategy

- Exchange rate: exchange rate is the comparison of currency value of onecountry with that of other country Competitiveness of company products aredirectly influenced by exchange rate changes in international markets Exchangerate changes also affect greatly the export items price.

- Inflation rate: inflation rate could cause chaos in the economy and limiteconomic growth and make the price fluctuation become unexpected Henceinvestment activities become job of chance, it is hard to forecast the future

- International relation: changes in international environment bring manyopportunities for foreign investors and improve competitiveness in domesticmarket

d Political/legal factors

Political and legal factors have great influence on company businessoperation Political stability is considered an important premise for companybusiness operation The change of political environment could have positiveinfluence on a group of companies but inhibits the development of others and viceversa Perfect and non-biased law system is one of the non - economic premises inbusiness The level of perfection, change and law enforcement in the economyaffects business strategy greatly Political and legal environment affects thecompany business results directly because it influences the products, businessmethod and the industry company It also has impact on the costs of: manufacture,distribution, transportation expense, tax rate… Especially import and exportcompanies are affected by international trade policy, tariff assigned by theGovernment, and protection law for companies In brief, the political and legalenvironment affects business effectiveness improvement of company throughlegislation tools, macro economic regulation tools …

e Technical – technological factors

Advanced techniques and technology pave the way for company’s activeimprovement in goods quality and productivity Products are mostly impacted bythe following factors : product characteristics, product price, and productcompetitiveness Company could raise its competitiveness, increase cycles ofworking capital and profit to ensure reproduction enlargement process On thecontrary, low techniques and technology not only decrease the companycompetitiveness and profits but also hold back the development In brief, technical– technological factors allow company to improve productivity, product quality so

as to improve competitiveness and business effectiveness, increase the cycle ofcapital and profits

1.2.2.2 Micro environment (industry environment)

Whether it’s a narrow production industry or a technical – economicindustry with many companies, it can offer same or similar and substitute productsand services The task of strategists is analyzing and judging competitors inindustry environment to identify opportunities and threats for their company.Porter’s 5 forces analyzing model shows that :

* Potential rivals:

Chart 1.1 The five competitive Forces that shape Strategy

* Potential rivals are companies that are not in the industry but may enter business operation of this industry New rivals take part in the industry can be a factor that may decrease profits of company Rivals newly participate in the

industry could be a factor lowering profit of company The influence of this rival

on the company depends on competitiveness of the company (scale, technologyetc.) The appearance of these rivals changes the picture of industry competitionand no matter how the competition changes, their appearance will raise theindustry competitiveness Hence, operating companies find all ways to preventthese potential rivals from entering their business field

However, according to M Poster there are some difficulties for companiesoutside the industry which desire to enter the industry:

- The preference of customers for old products because of advertisement,brand name, and product quality and after sales services

- Difficulties in lowering cost when entering other industry

- Effectiveness of large business manufactures scale

*Substitute products

Substitute products is products of current rivals, this is a usual pressurethreatens company directly Substitute products are products of companies in thesame industry or in other industries but satisfy the same demand of customers

Hence, the existence of substitute products forms a high competitivepressure It limits price level that company can set and limits the profit ofcompany On the contrary, if products of a company have few substitute products,that company has more chances to raise price and get more profit It’s especiallytrue for substitute products which appear inside the company

* Price pressure of customers

Customer is considered competitiveness related threat as they lower price

or request better quality of products and services and raise companies’ operationcost In contrast, if customers are in disadvantageous position, it will be anopportunity for company to increase price and gain more profits

Pressure from customer’s base on some indicators :

- Concentrated customers or not

- Companies being main suppliers or not

- Loyalty of customers

- Customers’ ability to find substitute products

- Switching cost

- Favorable vertical integration possibility

* Price pressure of supplier

Supplier is considered threats to company as they can raise price ofsupplied commodity or lower supplied product quality, change payment condition,delivery condition… affect cost price, product quality and affect profits ofcompany Companies usually have relation with companies supplying commodity,different inputs such as labor, equipment and finance Factors raising supplierpressure are the same as customer pressure factors:

- The number of supplying companies is little and company finds it difficult

to choose supplier

- There are few substitute products for those that the company needs tobuy

- Company is the main customer of the supplier or not

- Supplier concentrates or not, if supplier concentrates, pressure fromsupplier will be higher, company will have disadvantage

1.2.3 Internal company analysis.

Internal company factors include functional fields such as : labor force,research and development, production, accounting and finance, marketing, andcompany culture All companies have strengths and weaknesses in their functionaldivisions There are no companies that are so strong or so weak in every field.Clear strengths/weakness, opportunities/challenges will be a base for working outobjective and strategy Internal environment assessment is checking, assessing allaspects of company, relations of divisions, pointing out strengths as well asweaknesses, is the premise for developing strengths, improving its shortcomingsand repairing existing weaknesses

Internal company analysis includes financial analysis, function analysis

Capital raising ability=

PER =

Firms will have high capacity to increase their equity if this norm is high or theirshares are high-valued on the market, or the current year’s earnings retained fornext year’s investments are large

companies in a same industry

Profit/Ownership Capital Ratio=

This indicator shows how much profit a unit of ownership capital can produce

1.2.3.2 Function analysis

* Production function in business operation is a process changing inputsinto outputs (goods and services) For most of industries, production cost forproducing goods and services occupies large proportion, so production function isconsidered a competitive weapon in company strategy

* Marketing function and product distribution: Marketing can be described

as a process of defining, forecast and satisfying the demands of customers forproducts and services Marketing operation analysis includes: customer analysis,market research, goods purchasing and selling

* Human resources management function : Human resources play a veryimportant role to the success of the corporation Human resource managementtoday plays a big role in all companies Objective of human resource management

is developing human resources plan which consists of:

- Forecasting human resources demand of the company in the future

- Arranging properly human resources in the company

- Ensuring supply and demand of human resources for activities

- Identifying specific methods to manage human resources.

* Research and development function: The quality of research anddevelopment efforts of company can assist company sustain leading position in theindustry or vice versa, make company backwards in comparison to other company

in terms of new product development, product quality, cost price control,production technology … Research and development activity can divide into 3kinds : research products to create a brand new products ahead of rivals, research

to improve products so as to improve quality or characteristics of availableproducts, research for renewing technology to improve production process with aview to lower cost of improve quality

* Raw material management function: this function is considered ascientific management method, it becomes an important activity in manycompanies and builds up strengths for its low cost Hence effective raw materialmanagement can lower reserved cash money in order to invest into equipment andmachine

All companies have strengths, weaknesses in business aspects There are nocompanies that are strong or weak in every field Internal strengths, weaknessesand external opportunities, threats are basic point that company needs to considerwhen building up strategy Defining strengths, weaknesses of company is based oncomparison with other companies in the industry and its operation results.Strengths of the company are what better than rivals who find difficult to have and

it makes favorable competitive advantages for the company Weaknesses are theshortcomings of company, it is what the company should adjust when working outstrategy

To combine the above analysis process, it’s necessary and proper to useSWOT matrix

SWOT analysis is putting opportunities, threats, strengths, and weaknesseswhich influence the current and future position of company in an interactiverelation then analyze it to identify strategic position of each relation.

(Opportunities) SO combined strategy WO combined strategy

(Threats) ST combined strategy WT combined strategy

Chart 1.2: SWOT matrix model

In which:

SO Strategy - «development » strategy: combine opportunities and strengths factor of the company to expand and diversify Strengths and opportunities of company need to be used to compete with other companies and expand market.

WO Strategy: weaknesses are bigger than strengths but external

opportunities predominate It corresponds to “competition” strategy Thiscombination enables company to overcome weaknesses by taking advantages ofopportunities

ST Strategy : this is the situation where company uses internal strengths to

fight against external constraint conditions This strategy is called «opposition »strategy

WT Strategy- “Defense” strategy: Company is unable to deal with external

risks and has its development capacity revoked In this situation, company has twoways: being bankrupt or cooperate with other company This combination requestcompany to use method of lowering weaknesses to avoid risks by using defensestrategy

1.2.4 Rival analysis

Knowing about rival is very important in analyzing and forecast businessenvironment and base on which proper act for company can be built Companyneeds to collect information on strategy, objectives, strengths, weaknesses andreactions of rivals Company needs to know strategy of each rival to discoverrivals to forecast next methods and reactions With knowledge of strengths andweaknesses of rivals, company can complete its strategy to predominate withshortcomings of rivals, and avoid invading markets where rivals predominate.Knowing typical reaction of rival will help company choose and set time ofimplementing strategy methods effectively.

1.2.5 Building up strategy options

Business strategy consists of decisions on: which products and services thatcustomers need ? Who are customer targets need satisfying? How to satisfycustomers? These three decisions are expressed specifically in strategies ofproduct strategy, market strategy , competition strategy and investment strategy

1.2.5.1 Product strategy

Product strategy is effective business method based on satisfying demand

of market and taste of customers in each business operation period of company

Content of product strategy

- Identifying size of product combination in strategy : size of productcombination in strategy is the number of product categories and their quantity,type, model and style that the company intends to market Each category ofproducts has different types, so the product strategy has to mention clearly whichtype it addresses to Hence, in the product strategy the company has many options

of producing and supplying many categories of products and services or someproduct categories but many types

- New product research:

+ Improve product quality by improving available products or creating newproducts.

+ Each kind of products has certain life cycle, when products come intorecession period, company has to replace new products

Competitive advantages are «unique capacity » that can be controlled bycompany, recognized and highly appreciated by the market Company usecompetitive advantages to compete with other companies

When products and services of company are the same as those of rivals butcheaper, company has cost advantage The way company operates is differentfrom rivals will create differences, so company has advantage of differences: theproduct is better, selling price is higher or the product is simpler and selling price

is lower

* Types of competitive strategy:

- Low cost strategy: is strategy that company makes their great efforts toproducing goods and services at lower cost than rivals

- Differentiation strategy: purpose of strategy is to obtain competitiveadvantage by creating unique products as remarked by customers Difference willassist company quote higher price than average price of the industry, so they getmore profits

- Focus strategy : is strategy that company emphasizes on its competitiveadvantage of some special segments, this segment can be identifiedgeographically, by type of customers or a branch of products series Choosing amarket segment helps company focus its strength and go against invasion of othercompanies.

* Investment strategy (company strategy)

A company which has different activities and many parts doing differentbusinesses, company has to make decision on which part it will invest into andwhich part it will avoid to invest This will :

- Avoid wasting unnecessarily when concentrating much on unpromisingactivities

- Avoid missing opportunities for not invest or invest so little intopromising activities

The problem here is how company can identify promising activities Ifthere is a lot of promising activities, which of them will be the more promisingactivities In fact it depends on :

+ The attractiveness of the industry

+ Competitive position of company

* Development strategy at company level

- Vertical merging or acquisition: company is in charge of manufacturingand supplying inputs for manufacturing, and distributing by themselves

- Diversification : 3 forms of diversification : horizontal diversification,verticaldiversification and related diversification

- Cooperation and coalition strategy : companies cooperate and ally witheach other to implement a strategy that they themselves can not cover financially

as well as prevent risk threatening their development

1.2.6 Analyzing and selecting strategy

The objective of analyzing and selecting strategy is setting up long termobjective and working out replacing strategy, choosing some strategies to follow.Analyzing and selecting strategy is to find way to obtain their mission as well asobjectives it set up

* Criteria to select strategy

- Quantitative standard : business strategy always associates with indicators

of quantity such as sales quantity, market share, total revenue and profits… It iseasy to identify these criteria In general, in defining quantitative standards,company uses criteria of sales ability, profit making ability…

- Qualitative standard : Not all business strategy can not be identified interms of quantity, managers sometimes make mistake because of abusing figures.Therefore, besides qualitative criteria, quantitative criteria are needed to choosebusiness projects These are criteria like: company influences on the market, safety

in business operation and adaptation of strategy with the market

1.2.7 Strategy implementation

This is an important period to make planned strategies into specific action.Strategy implementation has intensive influence on the whole company,affects divisions and functional parts In strategy implementation, the skills of eachindividual are very important Strategy implementation such as support budget,company culture program, staff encouragement linked with staff commendationand rewards

Strategy implementation being successful or not depends on strategyquality as well as staff encouragement of managers

1.2.8 Monitoring and evaluating strategy implementation

In strategy implementation, it is necessary to check if these strategies can

be implemented as planned There are many reasons that some strategy can notobtain the planned objectives These reasons are changing environment orinability to attract human resources Hence, evaluating implementation can bemade through feedback information

Regulations on building up and implementing strategy are carried outthrough following steps :

Identify objective and mission

Assess external environment

Analyze internal company

CHAPTER 2 BUSINESS AND MANUFATURE OEPRATION SITUATION OF

NHA BE GARMENT CORPORATION 2.1 INTRODUCTION OF NHA BE GARMENT CORPORATION

2.1.1 ESTABLISHMENT AND DEVELOPMENT HISTORY

In 1975, the 2 initial garment factories of NHA BECO were Ledgine andJean Symi located in Saigon Export Processing zone

which had operated prior 1975

After the reunification day, the zone was

administered by the Industry Ministry and changed its

name from Export Processing zone into Export

Processing Zone Garment Company

As of June 1980, the company was changed name as Nha Be GarmentExport Company

In March 1992 and in 1990s, in line with the renovation of the country, thegarment and textile industry became a major industry

In accordance with such common development, Nha Be Garment Companywas established by the decision of Industry Ministry

In 2004, in continuing implementing renovation under the direction of theVietnam Communist Party, Nha Be Garment Company was changed into Nha BeGarment Corporation – Joint Stock Company by the decision numbered 74/2004/QĐ/BCN dated 6th of August 2004 and decision numbered 88/2004/QĐ/BCNdated 8th of September 2004 by Industry Ministry

Nha Be Garment Corporation

04 Ben Nigh Street, Tan Than Dong Commune, District 7

Ho Chi Minh City, Vietnam Switchboard: (84-8) 8720077 Fax: (84-8) 8725107

Mr Vu Si Nam Mrs Duong Thi Ngoc Dung

Mr Nguyen Van Hoang

Mr Pham Phu Cuong

Mr Le Mac Tuan

Mr Tuan Nguyen Nghi

Deputy General director

Mr Le Mac Tuan Managing director

Mr Tuan Nguyen Nghi Managing director

Mr Tuan Nguyen Nghi

Dependent Companies

Independent

companies

Cooperation companies

Division of corporation

Foreigner Joint ventures

Deputy General director

Mr Pham Phu Cuong

Shareholder’s meeting

Deputy General director

Mrs Nguyen Thi Anh Hong

Chart 2.1 Organization structure of Nha Be Corporation

Over 30-year construction and development since 2 initial factories, Nha BeGarment Corporation - Joint Stock Company (NBC) has 33 business units, amongwhich 14 are corporate enterprises, 11 independent business units, 08 trading andservice establishments, with the number of workforce of approximately 17,000,and about 13,000 pieces of modern specialized machinery and equipment

NBC has a variety of modern and specialized equipment and machinery to beoperated in many regions through over the country such as Ho Chi Minh City,Tien Giang, An Giang, Binh Duong, Binh Thuan, Dalat, Kontum, Gialai, NamDinh, etc

Production capacity and major goods:

Current production capacity : USD 4.2 millions CM per month including products

as follows :

• 200,000 units of high grade Men’s suits

• 300,000 units of high grade Women’s suits

• 500.000 men’s and women’s shirts

• 600.000 men’s and women’s trousers

• 700.000 fashion products of all kinds

Other services

Trading agriculture, forestry and sea food processed products, equipment

machinery, household appliances, industry, electronics, and information

Trading house and construction Real estate brokerage

Warehouse and yard service

Petroleum transportation by automobile and waterway in domestic country Trading in restaurant, accommodation, domestic and international traveling and tourism

2.1.4 CONSUMPTION MARKET

Domestic market

Nha Be Garment

Corporation shops covering

all cities and provinces

nationwide

Agent system.

- The company produces for

exporting 100% of its products to markets

with the following structure: Japan 20%,

USA 40%, and Europe 40%

- Target market structure changes

according to market condition and business

effectiveness In 2004, after being

privatized, the USA market is 25% and

Japan 45% At present, the percentage of

USA market rises up (because of big

purchase order, production technique is not

too sophisticated) the percentage of Japan market decreases (because of smallpurchase order, technique is sophisticated) USA market is forecasted to rise up fornot being tied to the tariff when Vietnam is a member of WTO.

Distribution channel

Business system in domestic market including many shops,supermarket system like Coopmark, Metro, Vinatex, Tax trading center and morethan 100 agents who supplying products

The system is divided into 2 main regions:

South: form Quang Tri to Ca Mau

North: From Quang Tri to provinces of the North

- First rank, second rank, third rank labor medals

- Emulation flag and certificate of merit of the Governmentfor many years

- Emulation flag of Vietnam Labor Federation

- Certificate of merit of Trade Ministry for 5 successive years large exports

- Title “Vietnam high quality products" organized by Sai

Gon Marketing Newspaper from 1998 to 2006 Especially, in this

election, Nha Be Garment Corporation is one of 100 strong trade

mark of Vietnam

- Rewarded with “Viet Land Golden Star” from 2002 to 2005

In the election for “Vietnam outstanding company of the garment industry”

in 2005 (jointly held by SaiGon Economic Times and Vietnam Textile and

Garment Association), Nha Be Garment Corporation obtained 3 rewards:

- Outstanding non state – owned company

- Good growth rate company

- Good labor relationship company

Quality management system certificates awarded:

 Certificate SA 8000; Certificate ISO 9001-2000; Certificate WRAP

2.2 ANALIZING BUSINESS OPERATION RESULT SITUATION IN RECENT YEARS

BUSINESS OPERATION RESULTS NHA BE GARMENT

Total long term assets 209.077 395.656 394.481 517.089

Net profit from production

Table 2.2 Business operation results of company in recent years ( 2005-2008)

( Resource: Nha Be Garment Corporation)

Market share:

* Domestic market:

Nha Be Corporation is one company with the largest market share domestically,

the company behind only a few large companies such as May 10, May 2, Vietnam

Tien Currently, domestic market share May the friends accounts for 11.11%, this is

not a big number but it is also partly confirmed the company's position in the market of