Business plan to invest honeycomb paper line in he vi trading producing company limited

TR NG IH CM TP.HCM HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITÉ LIBRE DE BRUXELLES SOLVAY BRUSSEL SCHOOL MBAVB3 BAO TRAN DO HOAI BUSINESS PLAN TO INVEST HONEYCOMB PAPER LINE IN HE VI TRADING PRODUCING COMPANY LIMITED MASTER PROJECT MASTER IN BUSINESS ADMINISTRATION (PART – TIME) Tutor’s Name: Dr Prof TRINH THUY ANH Ho Chi Minh City (2010) i    Certificate By this writing, I want to confirm that this project has not already been submitted for any degree or duplication from others I certify that I have myself studied and researched the project’s problem with my best knowledge thru applied the academic knowledge obtained from the MBA program Ho Chi Minh City, 20 February 2011 Signed: TRAN DO HOAI BAO     ii    ACKNOWLEDGEMENT To carry out the success of final project, I owe a debt of gratitude to many people who helped me complete this thesis I would like to acknowledge the help of all First of all I would like to express my deepest acknowledgement to my tutor, Professor Trinh Thuy Anh from the Ho Chi Minh City Open University, for her guidance, valuable advice and I could not find out any word to express my heartfelt to thank her My grateful acknowledgement is extending to the Université Libre de Bruxelles – Solvay Business School and Open University of HCMC, which provided me a a specialist knowledge in this part time MBA program I would like to thank all my classmate, friends and colleague who support me during the study related to data collection Finally, I am indebted to my parents and my wife, I would like to express my profound gratitude to my beloved parents thanks for their encouragement My greatest debt of gratitude is to my wife, Mrs Nguyen Thi Tuyet Trinh, who is always beside me during my study This thesis could not have been written without her daily encouragement     iii    COMMENTS OF TUTOR ………………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………… ……………………………………………………… Ho Chi Minh City, …… February, 2011 Tutor Dr TRINH THUY ANH     iv    TABLE OF CONTENTS Certificate i Acknowledgements ii Comments of tutor iii Table of contents iv Glossary of terms and abbreviations viii List of figures & chart ix List of tables x Executive summary xi Chapter INTRODUCTION OF THE PROJECT 1.1 Rational of the project 1.2 Research question 1.3 Objectives of the project 1.4 Research methodology and data collection 1.4.1 Methodology 1.4.2 Data required for this business plan 1.4.3 Scope and limitation of the research study 1.5 Project Process Chapter HONEYCOMB PAPER OVERVIEW & BUSINESS PLAN 2.1 Brief information on honeycomb paper 2.2 Honeycomb paper application 2.3 Opportunity assessment 10 2.4 Market research 12 2.5 Business plan 13   v    2.6 Financial appraisal 13 2.6.1 Payback period (PBP) 13 2.6.2 Net Present Value (NPV) 14 2.6.3 Internal Rate of Return (IRR) 14 2.6.4 Break-even point (BEP) 15 Chapter MARKET ANALYSIS 3.1 HE VI TPC overview 3.1.1 HE VI TPC profile 17 3.1.2 Management team and structure 18 3.2 Paper packaging market overview 18 3.3 Market analysis 3.3.1 Local market 20 3.3.2 Oversea market 21 A Wood & Furniture export 23 B Electric & electronic 24 C Food & beverage 25 D Handicraft 26 3.3.3 Opportunities A Macro economic 26 B Legislation 27 C Opportunities 28 3.3.4 Analysis of Five Forces Forter A New entrants 30 B Substitutes 30 C Power of buyers 31 D Power of suppliers 31 E Industry competitors 31   vi    Chapter BUSINESS PLAN 4.1 Market and sales 4.1.1 Input factors 32 A Place 32 B Construction and facilities cost 33 C Cost of honeycomb paper line and transportation 35 D Payroll and other expenses 36 E Annual Cost & Expenses Estimation 37 F Honeycomb capacity and Sales 40 4.2 Financial Analysis 41 4.3 Action plan 46 4.3.1 Capital 46 4.3.2 Human resources 46 4.3.3 Materials 47 4.3.4 Marketing Plan 47 Chapter CONCLUSIONS AND RECOMMENDATIONS 5.1 Conclusions 49 5.2 Recommendations 50   vii    Glossary of terms and abbreviations BEP Break-even point EU European Union FDI Foreign Direct Investment F&B Food & Beverage GDP Gross Domestic Product IRR Internal Rate of Return NPV Net Present Value PBP Payback period PC Present Cost PV Present Value ROsH Restriction of Hazardous Substances Directive USA The united state of America USD United States Dollar VND Vi t Nam đ ng WTO World Trade Organization   viii    LIST OF FIGURES & CHART Figure 1.1: Project Process Figure 2.1: Honeycomb paper panel process Figure 2.2: Honeycomb paper Figure 2.3: Honeycomb paper door Figure 2.4: Honeycomb paper board and its shape 10 Figure 2.5: Honeycomb paper pallet 10 Figure 2.6: Product life cycle 11 Figure 2.7: The normal distribution of adopter 11 Figure 2.8: Business plan structure 13 Figure 3.1: Organization structure 18 Figure 3.2: Sale process 18 Chart 3.1: Paper packaging consumption (Unit: 1,000 tons) 19 Chart 3.2: Paper consumption in some countries in Asia 19 Chart 3.3: Paper consumption in Asia (Unit: million tons) 19 Chart 3.4: Capital and output growth rate 20 Chart 3.5: The density of plastic industry chart 20 Chart 3.6: Construction output value 20 Figure 3.3: Department in Vietnam 21 Chart 3.7: Export turnover rate per Vietnam’s GDP 21 Chart 3.8: Vietnam export turnover from 2006 to 2009 22 Chart 3.9: Export turnovers was divided into economic structure 23 Chart 3.10: goods exported over billion USD in 2008 23 Chart 3.11: Density of Wood & Furniture Export in Y2009 24   ix    Chart 3.12: Wood & furniture export turnover at some countries in year 2008 & 2009 24 Chart 3.13: Wood & Furniture export turnover from 2006 – 2009 24 Chart 3.14: Electronic and electric component export turnover from 2006 -2009 25 Chart 3.15: Fruit export turnover of Vietnam nine months 2009 26 Chart 3.16: Handicraft export turnover from 2006 – 2009 26 Chart 3.17: Vietnam GDP by sector 27 Chart 5.1: Distribution Turnover 52   Appendix MBA Final Project   Chart 3.6: Construction output value Construction output value 50,000  40,000  42,875  42,712  38,232  34,428  30,000  Construction output value 20,000  10,000  2005 2006 2007 2008 Source: GSO1 Figure 3.3: Department in Vietnam Source: www.vneconomy.vn                                                               General statistics office  MBAVB3   Bao Tran Do Hoai Appendix MBA Final Project   Chart 3.7: Export turnover rate per Vietnam’s GDP Source: www.vietrade.gov.vn Chart 3.8: Vietnam export turnover from 2006 to 2009 Vietnam export turnover 2006 2009 (Unit: billion US dolllars) 70 62.9 56.58 60 57.8 48.38 50 39.8 40 Export Turnover 30 20 10 2006 2007 2008 2009 10M/2010 Source: Vietnam Customs MBAVB3   Bao Tran Do Hoai App pendix MBA M Final Project P   Charrt 3.9: Expo ort turnove ers was div vided into economic e sstructure Exportt turnoverrs was divvided into economicc  structurre FDI Dom mestic 47% 53% Source: Vietnam customs c C Chart 3.100: goods exported e ov ver billio on USD in 22008 (U Unit: billion n USD) Coffee Electrics 2.64 Wood 2.8 Rice 2.9 Aquattic product Year 2007 4.6 Footwear Year 2008 4.7 Textilee/Garment 9.1 Crude oil 10.5 10 12 Source: S GSO O, 2009 MBAVB3 M   Ba ao Tran Do o Hoai Appendix MBA Final Project   Chart 3.11: Density of Wood & Furniture Export in Y2009 The density of Wood & Furniture Export in  year 2009 Unit: 1,000 USD USA 54,579  Japan 331,106  56,736  China 67,492  UK 70,357  1,100,184  95,130  106,047  Germany Korea France 162,748  Australia Netherland 197,904  Canada 355,366  Others Source: Ministry of agriculture and rural development Chart 3.12: Wood & furniture export turnover at some countries in year 2008 & 2009 (Unit: 1,000 USD) 1,200,000  1,000,000  800,000  600,000  400,000  Year 2008 Year 2009 200,000  Source: Ministry of agriculture and rural development MBAVB3   Bao Tran Do Hoai Appendix MBA Final Project   Chart 3.13: Wood & Furniture export turnover from 2006 - 2009 Vietnam Wood & furniture export turnover  from 2006  2009 (Unit: million USD) 2,767  3,000  2,000  2,550  2,385  2,500  1,943  1,500  Wood export turnover  from 2006  2009 1,000  500  2006 2007 2008 2009 Source: GSO, 2009 Chart 3.14: Electronic and electric component export turnover from 2006 -2009 Electronic and electric component  export turnover from 2006  2009  (Unit: million USD) 3,000  2,640  2,500  2,000  2,774  2,165  1,808  Electronic and electric  component export  turnover from 2006  2009  (Unit: million USD) 1,500  1,000  500  2006 2007 2008 2009 Source: GSO MBAVB3   Bao Tran Do Hoai Appendix MBA Final Project   Chart 3.15: Fruit export turnover of Vietnam nine months 2009 100,000,000  90,000,000  86,145,411  80,000,000  70,000,000  60,000,000  50,000,000  37,098,374  40,000,000  Fruit export turnover 27,056,300  23,152,402  30,000,000  Unit: USD 14,964,766 13,924,223  20,000,000  10,000,000  Source: Vietnam Fruit Association Chart 3.16: Handicraft export turnover from 2006 – 2009 1000 929.4 900 880 799.4 800 700 608 600 500 Handicraft Export  Turnover 400 Unit: million USD 300 200 100 2006 2007 2008 2009 Source: GSO MBAVB3   Bao Tran Do Hoai Appendix MBA Final Project   Chart 3.17: Vietnam GDP by sector Unit: 1,000 billion VND MBAVB3   Bao Tran Do Hoai Appendix MBA Final Project   Depth interview guidance Dear Lady and Gentlemen, I, a student from the MBAVB3 course of the Solvay Business School, am doing the research on the final project regarding a Business plan of honeycomb paper line in He Vi TPC I am really grateful to receiving your kind response and expect to receive your unbiased and objective comments I commit to keep confidential your private information The result of the depth interview is used for my final project only Please kindly spend your precious free time to give me your idea or opinion about the below question of the interview If you have any claims about my questions, please don’t hesitate to contact me by email: tony@giaytoong.com.vn Thank you very much in advance for your efficient helps and supports The interviewee information Company’s name: Interviewee’s name: Company address: Telephone: Email: Business fields: Type of business: Thank you very much for your helps and supports!!! MBAVB3   Bao Tran Do Hoai Appendix MBA Final Project   1) What you think of Vietnam economy in the next years? o Economic growth rate o GDP o Inflation o Others 2) What is your prediction of Vietnam’s export in the next years? o Will much more expand o A little higher than 2010 o The same in 2010 o Not development o Others 3) What is your prediction of your business growth rate? o Will increase strongly o Will be downturned o Not considerably be developed o Others 4) By what you often use to package your product? o Paper o Plastic o Wood o Iron You can choose over element And explain your view MBAVB3   Bao Tran Do Hoai Appendix MBA Final Project   5) Which below factors will you consider as key factors when deciding to buy product for packaging? o Price o Product quality o Payment term o Distribution o After sale service o Others You can choose over element And explain your view 6) Somebody said that honeycomb paper will gradually substitute for plastic, wood, iron packaging and become an inner packaging for furniture because of the scarce wood resources and plastic is hard to disintegrate, what you think about this problem? o Absolutely agree o Disagree o Others Please tell me Why? 7) In case of you need to buy honeycomb paper, how many suppliers you know? Who are they? MBAVB3   Bao Tran Do Hoai Appendix MBA Final Project   8) Comparing with others suppliers, what you think about our products and service? o Better than all o Good price and quality o Good price and bad quality o Good quality and bad price o Good service (delivery, after sale and so on) o Others You can choose over element And explain your view 9) Comparing with others suppliers, what you think about our position in the market? o Quality o Price o Attribute o Benefit o Service o Others 10) When you decide to buy honeycomb paper, which elements will impact of your decision? o Price o Product quality o Distribution o Safety (non-toxic) o Industry design o Others You can choose over element and explain your view Could you tell me which thickness you often use in your Company? (10, 15, 20 and so on) MBAVB3   Bao Tran Do Hoai Appendix MBA Final Project   11) What time is often honeycomb paper being used in your company? o First quarter o Second quarter o Third quarter o Fourth quarter o If I have requests o Others You can choose over element And explain your view 12) How many percents of total packaging cost will you pay for honeycomb paper? 13) In such circumstances, He Vi TPC want to develop and expand their business which elements will make you satisfy to buy our products? o Price o Distribution o Product (quality) o After sale service o Delivery on time o Others You can choose over element And explain your view MBAVB3   Bao Tran Do Hoai Appendix MBA Final Project   14) In order to develop and expand honeycomb paper sales in Vietnam’s market, according to you, what should He Vi to get competitive advantages? o Product o Technical service o Increasing capacity o Financing o Others You can choose over element And explain your view 15) What are your findings of the developing potential of honeycomb paper in Vietnam in general and South of Vietnam in particular? o Rapidly growth rate o Not considerably be developed o Only few people apply them o Others 16) Nowadays, many countries and organizations appeal to everyone for using recycle materials to protect our environment, what you consider for this problem? o Well, I highly appreciate it o Not bad o It is too bad o Others Please explain your idea MBAVB3   Bao Tran Do Hoai Appendix MBA Final Project   17) In case of protecting our environment, most of countries force you to use recycle materials for packaging Which one you think for first choice? o Plastic o Paper o Wood o Others And why? 18) According to you, what kinds of business have to apply or use honeycomb paper in the near future? o Food and beverage o Wood and furniture o Handicraft o Textile and garment o Electric and electronic o Others You can choose over element And explain your view 19) From your point of view, in the list below, which ones you think it will be developed strongly in the future? o Food and beverage o Wood and furniture o Handicraft o Textile and garment o Electric and electronic o Others You can choose over element And explain your view MBAVB3   Bao Tran Do Hoai Appendix MBA Final Project   List of interviewee’s Company No Company’s Name BC Furniture Export VN Co, Ltd Blue Gate Co, Ltd Brema Marketing GmbH & Co, Dong Tam Furniture JS Co Fuji Denso Furniture Co, Ltd Golden Forturn Furniture Co, Ltd Green River Furniture Co, Ltd Green River Wood Co, Ltd Midea Air-Con Co, Ltd Mr Pham Quang Trong Ms Nguyen Thi Dung Ms Dang Thi Kim An Mr Chang Shih Chieh Mr David Nguyen Mr David Wang 10 11 12 13 14 15 16 17 18 19 20 21 22 Midea Air-Con Co, Ltd Minh Viet Furniture JS Co Pungkook Corporation Sai Gon River Co, Ltd TheodoreAlexander Co, Ltd Thompson Furniture Co, Ltd Truong Thanh Furniture JS Co Yasaka Fruit Processing Co, Ltd Viet Son Furniture Co, Ltd Vietnam Housewares Co, Ltd Wetter Indochine Limited WoodPark Furniture VN Co, Ltd WoodWorth Furniture Vn Co, Ltd Mr Ninh Hoc Thanh Mr Chu Nguyen Vinh Ms Nguyen Hong Hanh Ms Tran Ngoc Cuc Ms Hoang Thi Huong Ms Tran Thi Nguyet Mr Peter Quynh Mr Vo Hong Phuc Mr Le Hoang Tuan Anh Mr Bui Hong Quyet Ms Nguyen T Van Anh Mr Stanley Lin Ms Rose 23 WoodWorth Furniture Vn Co, Ltd Ms Lucky Duong MBAVB3   Interviewee’s Name Mr Nguyen Thanh Nga Ms Nguyen Trang Ms Nguyen Hong Hanh Interviewee’s Position Director Purchasing Manager Assistant of Managing Director Member of Management Purchasing Manager Purchasing Manager C.E.O Purchasing Manager Purchasing Director (China) Purchasing Director (VN) C.E.O Purchasing Manager Assistant of M Director Purchasing Department Sales Manager Purchasing Department Import- Export Manager Director Purchasing Manager Purchasing Manager Deputy General Manager Sofa Purchasing Department Furniture Purchasing Department Bao Tran Do Hoai ... the company The business plan is to prove the quality of the opportunity, to explain the business strategy, to define realistic and measurable targets, to verify the business feasibility, to. .. demand is shaping a new market of honeycomb paper in packaging market This project is to build a business plan for honeycomb paper line in Vietnam and in the South of Vietnam in particular In terms... between the gluing lines defines the cell sizes of the honeycomb The paper layers are winded on a big winding drum The drum shall continuous wind whenever layers is nearly full and then the paper layers