Xây dựng chiến lược thâm nhập thi trường PAKISTAN cho tổng công ty xuất nhập khẩu chè việt nam

1.3.1.1 External factors...3 1.3.1.2 Internal environment analysis...3 1.4 Supporting tools for defining and choosing strategies...3 1.4.1 Internal Factors Evaluation matrix IFE...3 1.4.

THESIS MBA

BUILDING STRATEGY FOR VIETNAM NATIONAL TEA CORPORATION TO IMPORVE EXPORTATION

TO PAKISTAN MARKET

TABLE OF CONTENT 3

LIST OF TABLES AND FIGURES 3

LIST OF ABBREVIATIONS 3

FOREWORDS 3

CHAPTER I: OVERVIEW OF STRATEGIC PLANNING AND STRATEGIC MANAGEMENT 3

1.1 Definitions and roles of strategy and strategic management 3

1.2 Roles of strategy and strategic management 3

1.3 Steps to study strategic planning 3

1.3.1 Operation environment analysis Error! Bookmark not defined. 1.3.1.1 External factors 3

1.3.1.2 Internal environment analysis 3

1.4 Supporting tools for defining and choosing strategies 3

1.4.1 Internal Factors Evaluation matrix (IFE) 3

1.4.2 External Factors Evaluation (EFE) 3

1.4.3 SWOT matrix 3

1.5 Strategy building and choosing key strategy 3

CHAPTER II: ANALYZE PRODUCTION AND EXPORTATION REALITY OF VIETNAMESE TEA CORPORATION TO PAKISTAN MARKET 3

2.2.1 Natural and social condition Error! Bookmark not defined 2.2.2 Political condition Error! Bookmark not defined 2.2.3 Economic condition Error! Bookmark not defined 2.2.4 Legal system Error! Bookmark not defined 2.2.5 Market size Error! Bookmark not defined.

2.3 Analyze operation reality of Vietnam National Tea Corporation 3

2.3.1 Internal environment analysis 3

2.3.1.1 Internal factors 3

2.3.1.2 Internal Factors Evaluation matrix 3

2.3.2 External environment analysis 3

2.3.2.1 Macro environment 3

2.3.2.2 Micro environment 3

2.3.2.3 External Factors Evaluation matrix 3

2.3.3 SWOT analysis for Vietnam National Tea Corporation 3

2.3.3.1 Strengths 3

2.3.3.2 Weaknesses 3

2.3.3.3 Opportunities 3

2.3.3.4 Threats 3

2.3.3.4 SWOT analysis and strategy selection for Vietnam National Tea Corporation3 2.4 Some assessments about tea production and exportation to Pakistan market of Vietnam National Tea Corporation 3

2.4.1 Outstanding achievements 3

2.4.2 Some limitations and reasons 3

CHAPTER III: SOME SOLUTIONS TO IMPLEMENT BUSINESS STRATEGY

FOR VIETNAM NATIONAL TEA CORPORATION 3

3.1 Development objectives of Vietnam National Tea Corporation in the coming years 3

3.1 1 Pakistan market in the coming years 3

3.1.2 Development objectives of Vietnam National Tea Corporation in the coming years 3

3.2 Solution to implement business strategy for Vietnam National Tea Corporation .3 3.2.1 Improve land conservation project 3

3.2.2 Rearrange processing units 3

3.2.3 Solutions for agricultural techniques to improve productivity and quality in tea regions 3

3.2.4 Solutions for invested capital 3

3.2.5 Human resources training 3

3.2.6 Market solutions: 3

3.3 Some petitions 3

3.3.1 Petitions to Government 3

3.3.2 Petitions to Vietnam Tea Association 3

CONCLUSION 3

REFERENCES 3

APPENDICES 3

LIST OF TABLES AND FIGURES Tables:

Table 1.1: SWOT matrix

Table 2.1: Internal Factors Evaluation Matrix

Table 2.2: External Factors Evaluation matrix

Table 2.3: Tea cultivation in recent years

Table 2.4: Volume and value of tea exportation to Pakistan from 2000 to 2007Table 2.5: DCR of some main Vietnamese exported products

Table 2.6: SWOT analysis for Vietnam National Tea Corporation

Table 3.1: Pakistani demand for tea in the coming years (*)

Table 3.2: Tea area target up to 2020

Table 3.3: Attracted capital for tea regions in the period: 2006 to 2010

Figures

Figure 1.1: P.E.S.T model

Figure1.2: Michael Porter’s Five Forces

Figure 2.1: Labor structure in Vinatea

Figure 2.2: Market share of tea products in Pakistan market

Figure 2.3: Some main related and supporting industries for Vinatea

Figure 2.4: Comparison between Vietnam’s, Kenya’s, and world tea price

Figure3.1: Volume of Black tea imported to Pakistan to 2016

LIST OF ABBREVIATIONS

3 FAO Food and Agriculture Organization

6 ICRG International Country Risk Guide

8 MARD Ministry of Agriculture and Rural Development

9 PPP Purchasing Power Parity

11 VINATEA Vietnam National Tea Corporation

FOREWORDS

1 Necessity of research

In the context of globalization and integration, comparative advantages andabsolute advantages are fully salvaged To maintain and expand profit level, eachcompany needs a suitable strategy to control the world market Foreign market bringsthe company many profits it also contains number of challenges If the companywants to be success in the world market it needs to examine its internal factors,

external factors and competitors and give out a sound strategy Studying the processwhich a company set up its strategy become a very imperative topic attracts manyeconomic researchers

Drinking tea is a long standing tradition of Vietnamese Tea industry not onlyplays an important role in satisfying domestic consumption but also contributemillions USD into GDP Tea is mainly cultivated in mountainous and highlands and

it plays important role in daily life of people in these areas Tea cultivation andproduction contribute about 50% to 70% their income To raise living standard forfarmers in mountainous and improve contribution in GDP companies which producetea need to find out foreign markets for exportation

There have been many researches which studied about tea cultivation andexportation: They are:

- “Orientation and solutions to promote tea production to 2010”, implemented

by Dr Nguyen Kim Phong, Director of Vietnam Tea Association in 2005 In thisarticle, the author proposed some petitions for operation and management in teaindustry and policy to promote exportation as well

- “Tea production and exportation, reality and solution”, studied by Dr Nguyen

Sinh Cuc, Ministry of Agriculture and Rural Development in 2001 Dr Nguyen SinhCuc brought out comprehensive solutions for tea production and exportation.However, from 2001 to present, with integration trend of the world economy,Vietnam economy has got many big changes So some of these solutions have notbeen suitable any longer

- “Modernize equipment and technology for tea production” implemented by

Vietnam Tea Association The project shown out the importance of improving quality

of tea products to compete in the world market

- “Tea - Current market situation and middle term out look” implemented by

FAO in 2005 By using econometric method, the research gave out some predictionsabout the development of the world market (include Vietnam production andPakistan exportation)

These theses bring meaningful contribution to development of tea industry andalso orient strategic managements for managers of tea producing companies.However, economic context has changed much so far so data and analysis in theseresearches cannot cover these changes Moreover, these works concentrate onstudying operation of the whole industry and tea market generally We really need aresearch which study operation of a specific company in a specific market With allthese below reasons we decide to choose study production of Vietnamese TeaCorporation and its strategy when reach to Pakistan market

2 Purposes of research

By using practical experiences when working in tea industry and study aboutstrategic management We would like to give out a real picture of operation ofVietnamese Tea Corporation in Pakistan market – a new and potential market forVietnamese tea industry

Through study and analyze operation of company we also give out some shortterm and long term solution for the company to orient and built up sound strategieswhen working with Pakistan market as well as other foreign markets

3 Scope of research

The research aims at analyzing operation of Vinatea when building upstrategies for Vinatea in general and its operation in Pakistan market From thisanalysis the company will get judicious decisions for operation

Data and information in this research were collect from production andexportation of company form 1995 to 2013

4 Methodologies of research

The research uses qualitative and quantitative method in studying Thesemethods are:

- Collecting and analyzing method

- Comparative analysis method

- Specialist analysis method

- Economic statistic method

The research also use kinds of models for analyze such as: SWOT matrix,GREAT matrix, etc

Information and data in the research were collect from annual report,magazines, papers, and other scientific researches of many specialist and experiencedmanagers in tea industry

Chapter 3: Some solutions to implement business strategy for VietnamNational Tea Corporation

CHAPTER I: OVERVIEW OF STRATEGIC PLANNING AND STRATEGIC MANAGEMENT 1.1 Definitions and roles of strategy and strategic management

“Strategy” is the term which has been widely and long standing used in manyfields “Strategy” was firstly used in military then in political field From 1950s to1960s of XX century, the concept of “strategy” was used in economic and socialfield Generally, “strategy” was understood as trend and method to resolve long termand overview mission According to UNIDO definition: “Generally, a developmentstrategy can be described as an outline of developing process to reach intendedtargets for a period from 10 to 20 years, it instruct strategic managers in attractingand allocating resources It can be said that, strategy provides a vision fordevelopment process and the consistence for implement solutions Strategy also can

be basics for overview developing plan in long term and short term or can be general

awareness of related people about prospects and willingness and challenges in aspecific period”

There are many definition of “strategy” To Fred R David (2003), strategyincludes numbers of method to reach long term target To Michael E Porter (1996),strategy is the creation of special and valuable positions include variable activities

In general, there are some differences in expression of concepts anddefinitions of strategy They still have some common content:

+ Define company’s short term and long term targets

+ Bring out solutions and methods to choose these solutions

+ Deploy and allocate resource to implement these targets

Besides understanding concept of strategy managers of company also need toknow the way to manage these strategies and make right decisions to reachcompany’s target, this process is called strategic management I can be generally saidthat: “Strategic management is defined as a set of decisions and actions expressed viaresults of planning, implement and evaluating strategies, created to reachcorporation’s long-run targets”

Strategic management includes these following specific steps:

+ Strategic planning

+ Strategic implement

+ Strategic checking and evaluation

1.2 Roles of strategy and strategic management

Characteristics of business environment have a big affect to existence anddevelopment of company They can create new opportunities and challenges forcorporation And the company which wants to exist has to find out a newmanagement method, it is exactly “strategic management” - strategy is the basis ofthis management method In model business environment, strategy becomes moreand more important to existence of company These roles are:

- Strategy is the tool that generally shows the long-term goals of theorganization or enterprise Enterprise’s goals are special targets which it wants

to reach during its operation process Specialization and making documentsthese targets via strategies will help members of enterprise or organizationswhen finding the targets which they want to reach so, they will know whatthey have to do It will help the enterprise easier in reaching its goals

- Strategy connects short term targets closely in long run conditions In modelbusiness situation, every enterprise has to flexibly move to adapt to changing

of environment Sometimes this movement will make the enterprise beseparated from its long term goals In this case, strategy with strategic goalswill help managers of enterprise a long run direction So, resolving short termmatters in long run conditions can bring enterprise a stable development Longrun goals also are basics for short term goals

- Strategy helps to ensure unification and make plans for enterprise’s activities

In existence and development process, strategy provides a comprehensive andlogical point of view in resolving problems which arises in business

performance Strategy also helps to associate different sections in a companyand orient them to reach to a unit goal, it is enterprise’s goal.

- Strategy helps enterprises and organizations to catch up with marketopportunities and create comparative position in the market Strategy unifiesthe enterprise’s operation process in order to reach to enterprise’s strategicgoals It means that enterprise will have to use its resource in most efficientway So, enterprises have to choose fastest way to catch up with marketopportunities and deploy its available abilities to create new comparativeadvantages

Form below analysis we can see very important roles of strategy inenterprise’s performance so, strategic management becomes one of the mostnecessary keys which helps enterprise open the door to advance toward success.Strategic management brings theses following advantages:

- More efficient in making plans by using more reasonable and logical approachmethod when choosing strategies

- Widely take care of related beneficiaries of enterprises (stock holders)

- Connect short term development in long term development

- Take care of both efficiency and effectiveness

1.3 Steps to study strategic planning

1.3.1.1 External factors

Every enterprise exists and develops in a given business environment and itsdevelopment is much affected by external factors Affection of external factors

sometimes is good and sometimes is bad Enterprise which wants to exist anddevelop has to realize the movement of these factors and adjust to be suitable withthese factors.

Business environment includes economics conditions or macro conditions andindustry conditions or demonstration conditions Industry conditions affect toeveryday activities of enterprise and economics conditions affect do not affectdirectly to enterprise’s but this affection is in long run and it can create crossroad indevelopment process of enterprise External conditions which affect to controlstrategic management include: micro conditions and macro conditions

Macro conditions: When analyzing affection of macro conditions toenterprise’s activities we use P.E.S.T model PEST model studies affection of 4 mainfactors which affect to enterprise’s activities These factors are: Political, Economics,Social and technological

Figure 1.1: P.E.S.T model

(Source: Strategic management: Concepts and cases – Fred David)

 Political: This is the factor which has affection to all industries in acountry, factors like: regulations and legal system can affect to every industries.When doing business in administrative unit enterprise has to follow its legal system

- Stability: when study the political factor of enterprise we will take care of

stability of conflict political factors with legal systems The country which has highstability in political condition will give a better environment for enterprise to expandits activities On the contrary, instability in political conditions will give bad affection

to enterprise’s performance

- Related law: investment law, enterprise law, labor law, anti monopoly and

dumping

- Regulations: Government’s regulations also can create favorability or

challenges for enterprises These regulations are: commercial regulations, industrydevelopment regulations, tax, tariff, adjusting competition regulations, consumerprotection regulations, etc

 Economic factors: Enterprise needs to take care of economic factors both inshort term and long term It also has to take care of intervention of Government intoeconomy In general, enterprise will base on economic factor to decide whichindustry or section to invest in

- Economic situation: Any economy also has different cycles in a specific

period of a cycle enterprise will have different decisions for its development

- Factors which affect to economy: Interest rate, inflation.

- Economic regulators of Government: Basic salary law, Government’s

economic development strategy, favorable regulation for a specific industry, increasetax or subsidiary, etc

- Orientation of economy: Growth rate, GDP growth, GDP per capital.

 Social: Any country or region has its own specific characteristics.These characteristics affect to consumer’s opinion here Valuable traditions can make

a basic for a society and support for development of this society So, tradition factorsare strictly protected, especially moral cultures However, we cannot deny that there

is interfering in culture between counties This interfering will change life style,psychology and create development prospect for industry

Besides culture, social factors and social characteristics also attract enterprisewhen making market research Social characteristics device society into many groupseach group has different income, psychology characteristics Other social characterslike:

- Average longevity, health situation

- Average income, income allocation

- Life style, life psychology, knowledge level

- Living conditions

 Technological: Recently, the whole world is still in technological revolution, list

of model technologies are implied and they are integrated into goods and services.Thirty years ago, computer is only a tool used for calculation, now it is a tool withfull functions and can work as a person Especially, in information technologysection, model communication helps us to shorten geographical distance

 Integration: No one can deny that, global integration now is an unavoidable trendand this trend created many opportunities for enterprise and country in developingand expand their business

- Globalization creates competitive pressure from every sections and regions.Integration process will force enterprises to adjust in order to conformity withcomparative advantages and global labor allocation in the world market

- In integration process commercial barriers will be step by step removed tocreate a fresh and fair business environment for all countries in the world

 Natural condition: Natural condition is one of the most important factors inhuman life, it also provide raw materials for many industries Recently, naturalcondition is much changed because of human destruction It also can affect todevelopment trend of enterprises

Nowadays, PEST model is expanded into PESLT matrix (political, economics,social-cultural, legal, technological) and S.T.E.E.P.L.E (Social/Demographic-,Technological, Economics, Environmental, Policy, Legal, Ethical) and becomes moreand more completed standard when studying external factors of an enterprise

Micro environment: They are conditions which tightly concern to enterprise’sactivities Factors of micro conditions will decide investment condition, competitivelevel, and industry’s profit According to Professor Michael Porter, micro conditionsare affected by five competitive forces it called “Michael Porter’s Five Forces”model Five forces are: The threat of substitute products or services, the threat of theentry of new competitors, the intensity of competitive rivalry, the bargaining power

of customers, the bargaining power of suppliers

Figure 1.2: Michael Porter’s Five Forces

(Source: Strategic management: Concepts and cases – Fred David)

The threat of substitute products or services

The existence of products outside of the realm of the common product boundariesincreases the propensity of customers to switch to alternatives:

 Buyer propensity to substitute

 Relative price performance of substitute

The threat of the entry of new competitors

The intensity of competitive

rivalry

Substitute products

 Buyer switching costs

 Perceived level of product differentiation

 Number of substitute products available in the market

 Ease of substitution Information-based products are more prone tosubstitution, as online product can easily replace material product

 Substandard product

 Quality depreciation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms This results in manynew entrants, which eventually will decrease profitability Unless the entry of new

firms can be blocked by incumbents, the profit rate will fall towards a competitivelevel (perfect competition)

 The existence of barriers to entry (patents, rights, etc.)The most attractivesegment is one in which entry barriers are high and exit barriers are low Fewnew firms can enter and non-performing firms can exit easily

 Economies of product differences

 Brand equity

 Switching costs or sunk costs

Capital requirements

 Access to distribution

 Customer loyalty to established brands

 Absolute cost advantages

 Learning curve advantages

 Expected retaliation by incumbents

 Government policies

 Industry profitability; the more profitable the industry the more attractive itwill be to new competitors

 Internet era; today competitors need only a website to enter a market

The intensity of competitive rivalry

For most industries, the intensity of competitive rivalry is the majordeterminant of the competitiveness of the industry

 Sustainable competitive advantage through innovation

 Competition between online and offline companies; click-and-mortar brick-and-mortar

-v- Level of advertising expense

 Powerful competitive strategy

 The visibility of proprietary items on the Web

The model used by a company which can intensify competitive pressures ontheir rivals How will competition react to a certain behavior by another firm?Competitive rivalry is likely to be based on dimensions such as price, quality, andinnovation Technological advances protect companies from competition Thisapplies to products and services Companies that are successful with introducing newtechnology are able to charge higher prices and achieve higher profits, untilcompetitors imitate them Examples of recent technology advantage in have been

mp3 players and mobile telephones Vertical integration is a strategy to reduce abusiness' own cost and thereby intensify pressure on its rival

The bargaining power of customers (buyers)

The bargaining power of customers is also described as the market of outputs:the ability of customers to put the firm under pressure, which also affects thecustomer's sensitivity to price changes

 Buyer concentration to firm concentration ratio

 Degree of dependency upon existing channels of distribution

 Bargaining leverage, particularly in industries with high fixed costs

 Buyer volume

 Buyer switching costs relative to firm switching costs

 Buyer information availability

 Ability to backward integrate

 Availability of existing substitute products

 Buyer price sensitivity

 Differential advantage (uniqueness) of industry products

 RFM Analysis

The bargaining power of suppliers

The bargaining power of suppliers is also described as the market of inputs.Suppliers of raw materials, components, labor, and services (such as expertise) to the

firm can be a source of power over the firm, when there are few substitutes Suppliersmay refuse to work with the firm, or, e.g., charge excessively high prices for uniqueresources

 Supplier switching costs relative to firm switching costs

 Degree of differentiation of inputs

 Impact of inputs on cost or differentiation

 Presence of substitute inputs

 Supplier concentration to firm concentration ratio

 Employee solidarity (e.g labor unions)

 Supplier competition - ability to forward vertically integrate and cut out thebuyer

1.3.1.2 Internal environment analysis

Enterprise’s ability is one of the most important factors which decide what itcan do and whether it can be successful or not To en sure the feasibility of a strategy

we have to evaluate enterprise’s current situation, realize strong points and weakpoints by that way we can find out its comparative advantages Internal analysis isimplemented in these following sides:

Valuable chain analysis

Valuable chain is the sum of enterprise’s activities which can improve itsvalue Organization’s valuable chain includes these components:

- Main activities: they are activities which closely connect with company’sproducts and services For example: purchase and control materials, marketing, andafter sale services These activities are evaluated to know whether they are save cost,increase products’ and services’ quality and satisfy customers’ need or not The morethese activities are highly evaluated the higher company’s valuable chain is and thecompany will have comparative advantage

- Supporting activities: Besides main activities, supporting activities willindirectly influence to company’s products and services Supporting activities willhelp main activities to be implemented better and more efficient These supportingactivities are: human resource management, technology improvement, etc

Financial analysis:

Financial situation and financial indexes is the reflection of efficiency andcompany’s financial ability Company’s financial situation is not only reflectscompany’s current ability but also indicates its development ability in future Someindexes which frequently used in financial analysis include: current liquidity (totalfixed assets/current debt), leverage factors, liquidity ((current assets –inventory)/current debt), turnover rate of current assets, indexes indicate profitability, etc

Organization’s culture and enterprise’s reputation:

Enterprise’s reputation is now become more and more important for itsfoundation and development Each enterprise needs to make its employeesunderstand its target and philosophy This will force all members to reach company’scommon goals

Company’s reputation also helps to make its goals be successful Reputationcan be achieved in long process A company with famous reputation will easier inapproach new market and its products will be easily accepted However creatingreputation is as difficult as maintaining and enforcing it Besides analyzing internalfactors we also take care of some more factors like: legal in its activity andmanagement culture, etc

After analyzing internal factors, strategic managers will compare them Thesecomparisons indicate the company’s development in comparison with competitors inthe same sector

These comparisons are implemented follow three directions:

- Period comparison: This is compare company’s activities in different period

in relationship with its context

- Industry’s standard: Managers will compare company’s standards incomparisons with industry’s standards and main competitors This action will help torealize company’s position in the whole industry

- Identify essential success of industry: they are some important factors whichhave deep influence to company’s activities

1.4 Supporting tools for defining and choosing strategies

To support for establish and choosing strategy we use some main tools Thesebelow models will be some typical examples

1.4.1 Internal Factors Evaluation matrix (IFE)

Internal factors evaluation matrix summarizes and evaluates main strongpoints, weak points of some sections in company or the whole company IFE matrix

is developed through five steps:

First step: Establish the list of main factors which have determinant functions

to competitive ability of a company in an industry (normally, the list will have from

10 to 20 factors)

Second step: Defining important level by classifying from 0.0 (no important)

to 1.0 (very important) for each factor Be noted that important level defined for eachfactor will indicate its relative importance to success of company in doing business

So, for all company in an industry important level of all factors in first step are equal

Third step: Classify from 1 to 4 for each representative factor Biggest weakpoint equal to 1, smallest weak point equal to 2, smallest strong point equal to 3 andbiggest strong point equal to 4 So, they will be score for each factor in comparisonwith other competitors in industry.

Forth step: Calculate score for each factor by multiplying important level ofeach factor to its correlative classification score

Fifth step: Calculate total score for all factors in matrix by plus correlativescore of each factor This number will indicate company’s absolute competitionability

So, if total score for all factors in matrix equal to 4 the company will havehighly absolute competition ability If this number is from 2.5 and over, companywill have medium competition ability If it is smaller than 2.5 company’s competitionability will lower than medium

1.4.2 External Factors Evaluation (EFE)

External factors evaluation matrix helps to summarize and quantify influence

of external factors to enterprise It is also the same as IFE matrix analysis to analyzeEFE matrix we will implement through five steps:

First step: Establish the list of main opportunity and threat factors which willhave influence to company’s activities (normally, from 10 to 20 factors)

Second step: Defining important level by classifying from 0.0 (no important)

to 1.0 (very important) for each factor Be noted that important level defined for each

factor will indicate its relative importance to success of company in doing business.Total important level of all factors is equal to 1

Third step: Classify from 1 to 4 for each representative factor Biggest weakpoint equal to 1, smallest weak point equal to 2, smallest strong point equal to 3 andbiggest strong point equal to 4 So, they are scores which indicate the reaction ofcompany to opportunities and threats of market

Forth step: Calculate score for each factor by multiplying important level ofeach factor to its correlative classification score

Fifth step: Calculate total score for all factors in matrix by plus correlativescore of each factor

So, if total score for all factors equal to 4 company will have quick reaction toopportunities and threats of market If total score is from 2.5 and over, company willhave reaction level greater than medium If this number is less than 2.5 company’sreaction will be lower than medium

1.4.3 SWOT matrix

SWOT matrix is a strategic planning method used to evaluate the Strengths,Weaknesses, Opportunities, and Threats involved in a project or in a businessventure It involves specifying the objective of the business venture or project andidentifying the internal and external factors that are favorable and unfavorable toachieving that objective The technique is credited to Albert Humphrey, who led aconvention at Stanford University in the 1960s and 1970s using data from Fortune

500 companies SWOT matrix usually gives out four basic strategies: (1) SO(strength – opportunity): strategies which base on company’s strengths to deploymarket’s opportunities (2) WO (weaknesses - opportunities): strategies which base

on ability of getting through company’s weaknesses to deploy market’s opportunities.(3) ST (strengths - threats): company’s strategies to avoid market’s threats (4) WT(weaknesses- threats): company’s strategies to get through weaknesses and avoidmarket’s threats

Table 1.1: SWOT matrix

SWOT MATRIX

Strengths(S)

-Weaknesses (W)

(Source: Strategic management: Concepts and cases – Fred David)

Strengths: Two factors contribute to your strengths: ability and resources available.

+ Ability is evaluated on 3 counts:

Versatility: your ability to adapt to an ever changing environment

Growth: your ability to maintain a continuing growth

Markets: your ability to penetrate or create new markets

+The strength of resources has three dimensions:

Availability: your ability to obtain the resources needed

Quality: the quality and up-to-data of the resources employed

Allocation: your ability to distribute resources both effectively and efficiently.

Weaknesses: A company’s weaknesses are determined through failures,

defeats, losses and inability to match up with the dynamic situation and rapidchange The weaknesses may be rooted in lack of managerial skills, insufficientquality, technological backwardness, inadequate systems or processes, slowdeliveries, or shortage of resources There are three possible outcomes to the analysis

of your weaknesses

+Correction of an identified defect

+Protection through cover-up and prevention strategies to reduce the exposure

of your weaknesses

+Aggression to divert the attention from you weaknesses.

Opportunities: Opportunities are abundant You must develop a formula

which will help you define what comes within the ambit of an opportunity to focus

on those areas and pursue those opportunities where effectiveness is possible The

formula must define product/service, target market, capabilities required andresources to be employed, returns expected and the level of risk allowed.

Weaknesses of your competitions are also opportunities for you You canexploit them in two following ways:

+ Marketing warfare: attacking the weak leader's position and focusing all

your efforts at that point, or making a surprise move into an uncontested area

+ Collaboration: you can use your complementary strengths to establish a

strategic alliance with your competitor

Threats: External threats arise from political, economic, social, technological

(PEST) forces Technological developments may make your offerings obsolete.Market changes may result from the changes in the customer needs, competitors'moves, or demographic shifts The political situation determines government policyand taxation structure

1.5 Strategy building and choosing key strategy

Strategy is a system which includes list of policies and great solutions to

deploy and coordinate action routines help the company get the best way to

archive its targets Each enterprise can create a competitive advantage for

itself And they also have them all way routine and steps operate, for example,

the best quality, the best service, lowest cost or focusing on target market, etc

Low cost strategy

Enterprises’ target in reducing their cost is working and operating with

lower cost but still produce and operate better than competitors This strategy

has two advantages:

First, enterprise can set a lower price but still get equal benefit in

comparison with its competitors If other enterprises in the same industry can

get equal value, lower cost enterprise still get higher profit because of its lower

cost

Second, when the competition rises in the industry this enterprise still

has a steady standing because of is lower cost advantage

Advantages and disadvantages

- Create a barrier to protect from competitive actions of competitors It

means that: enterprise will not be much affected from rising in price of

materials or reducing in price of finish goods or services to powerful

customers

- When substitution products enter into market, enterprise with low cost

strategy can reduce it price to compete

- Creating barriers for enterprises which intend to join into market

because they cannot immediately have competitive advantage

- Besides, this strategy still has some weak points as following details:

Firstly, other current competitors also are able to lower their cost to enlarge

market share or they can imitate our strategy to get advantage of lowest cost

enterprise Secondly, if the enterprises only focusing on lower their cost and

forget other market factors as well as its changes their share will be affected

So, lower price product also has to ensure it specialization to get customer

attraction

Product specialization strategy

Product specification’s target is getting competitive advantage by

creating products, services which can be easily identified and originally

evaluate When its products can satisfy special need of customers these

products can be set a higher price level in comparison with average price of

industry, so the enterprise can achieve higher profit than other competitors

Otherwise, creating products with special factors will bring new added value

for customer Product specialization has some following characteristics

- Less sensitive market to price fluctuation

- There’s special point in customer need

- Products can be easily created special points in comparison with others

- The enterprise does not want to face to price competitions

This strategy also has some advantages and advantages as following:

- When enterprise successfully applied product specialization strategy it

will get more advantage than others and reduce competitive pressure from

competitors, and suppliers

- Creating customers’ loyalty to its product label It will be invaluable

asset of the enterprise If the enterprise is new comer in market it will have to

invest a very big capital and human resource

- Creating specialization cost the company a very big amount So the

additional benefit reached by develop special products must greater than the

cost to create them Enterprise also has to create different kind of products for

each market segment It will enlarger the cost And finally, advertisement fee

and marketing fee for many market segments

- In the short time competitors can easily imitate our idea and produce

similar products And they will use them as the weapon to compete with us

Centralization strategy

Centralization helps the enterprise focus on its strong field and deploy its

salient advantages to expand market share Enterprise which wants to apply

centralization strategy needs to focus on a fixed market segment This market

segment can be separated base on area or customer In a fixed market segment

the enterprise can avoid a part of competitive pressure from other ones in the

same field because other ones have not get advantages or they have not

realized it yet

In this market segment the enterprise can use cost advantage and

develop efficiently by producing with lower cost or deploy its best skills to

satisfy customer’s need

- Competitive ability of enterprise was built base on its special point,

efficiency, quality, innovation or adjustment base on customer needs The

strategy helps enterprise be protected from competitors when it can provide

products and services which other ones cannot It also shows out the

enterprise’s power to customers because they cannot have any other place to

choose the same products

- Creating loyalty of customers also help to reduce pressure of

substitute products New enterprise which wants to join into the industry has

to overcome customer’s loyalty to products which centralization strategy

enterprise created

However, enterprise which applies centralization strategy will miss out

a chance to expand market share It also cannot deploy all its salient

advantages

Strategy is a system of large policies and measures aiming at deploying

and coordinating the action programs, enables organizations to complete the

goals most effectively Company unit strategy covers all activities of the

company in order to compete most effectively, dominate on the market, and

ensure sustainable development Company unit strategy is to ensure

sustainable development selected from the following types of strategies:

Mixed strategy:

A company can apply many different strategies in a period The company canpay much attention to development in this area while cut down in others Thoseactivities aim at implementing successfully the company’s general objective duringthe strategy implementation period

The strategic choice out of strategies above depends on the company’scapability and related environment factors From the result of analysis of SWOTmatrix, the company will choose for itself the best business strategy

CHAPTER II: ANALYZE PRODUCTION AND EXPORTATION REALITY OF VIETNAM

NATIONAL TEA CORPORATION TO PAKISTAN MARKET 2.1 Overview of Vietnam National Tea Corporation

2.1.1 Establishment and development process

From 1974 to 1978

Vietnamese tea union was established according to 95/CP decision on19/04/1974 of Government and its official name is “Union of tea business firms”belonged to Ministry of Foods and Foods industry Its main duty is collecting andprocessing exported tea products

From 1979 to 1986

In 1979, union of tea business firm merged with National tea corporation(belonged to Ministry of Rural) and became union of tea business firm followed75/CP (3/1979) of council of state

From 1987 to 1995

In 1987, Vietnamese Government allowed enterprises to complete allprocesses of production and exportation Vietnamese tea Union merged withVinalimex to establish Vietnam National Tea Corporation

Vinatea is a corporation of tea business firms in many kinds of fields: teacultivation, processing, exportation with different kind of scales Even when theunion rearranged its management structure its control method still has somelimitations of old system

From 1996 up to now

Together with many changes of economic environment structure ofVietnamese tea union has not been suitable and tea industry needs a top enterprisewhich has enough strength to manage and control industry’s main activities fromcultivation, production to exportation This new model is Vietnam National TeaCorporation (VINATE)

After considering exportation and production demand of business firms in teaunion Ministry of Rural and Development decided to establish Vinatea On 29th Dec

1995 Minister of Ministry of Rural and Development signed 394NN-TCCB/QDdecision to allow officially existence of Vietnam National Tea Corporation

Abbreviation: VINATEACORP

Head office: 46 Tang Bat Ho street, Hai Ba Trung district, Hanoi

In June 1996 Vinatea officially operated

- Fixed assets: 68,163.6 million VND

- Current capital: 27,256.2 million VND

- Basic construction capital: 5,601 million VND

- Production development capital: 846.7 million VND

2.1.2 Functions and missions

With new management structure from establishment day, functions andmissions of Vinatea were much expanded Besides production and business Vinateaalso plays an important role in service field Some main activities of Vinatea are:establishing and rearranging intensive tea regions with high productivity and goodquality products

Beside existed business units to well complete its functions Vinateaestablished some sections like: information center, Vietnamese tea auctioning center,tea research institute, quality checking center, and service business units, etc

Main products:

Tea products of Vinatea were produced and processed by 100% domesticmaterials Tea production was followed a very strict and complicated process Teaproducts of Vinatea include some main type: Black tea OTD, black tea CTD,Japanese green tea, Japanese Taiwan tea, etc Besides, company also produces someVietnamese kind of tea like: OLong tea, yellow tea, fermented tea, etc Theseproducts are mainly provided for domestic consumption Up to now, tea products ofcompany’s members are really various with more than 200 kind of different products

2.1.3 Organization structure

With these below functions and missions, Vinatea needs to have a logical andefficient organization structure to make plan and operate its strategies Company’sorganization includes these following sections:

- Board of Directors: Board of Directors is the management section of

Vinatea Board of Directors operated follows as its function mentioned in the 8clause, 14th article in regulation of Vinatea Chairman of the Board is person whosigns documents and solves matters belong to his or her responsibility as rule ofBoard of Directors

- Supervision section: Supervision section will check and supervise

management activities of Chairman of the Board, assistance sections, and members inVinatea in these fields: Finance, production and business, basic instruction, rulesfollow, etc

- Board of Managers:

+ General manager is legal representative of Vinatea, who will be responsiblewith Board of Directors, Ministry of Rural and Development General manager cangive decisions by discussing with assistance manager and assistant sections

+ Assistant to general manager: assistant to general manager will help forgeneral manager follow allocation of general manager and will be responsible withgeneral manager and legal system about allocated responsibilities

Unit members: