Tiềm năng của chè Việt Nam trên thị trường quốc tế (LA tiến sĩ)

Tiềm năng của chè Việt Nam trên thị trường quốc tế (LÀ tiến sĩ)Tiềm năng của chè Việt Nam trên thị trường quốc tế (LÀ tiến sĩ)Tiềm năng của chè Việt Nam trên thị trường quốc tế (LÀ tiến sĩ)Tiềm năng của chè Việt Nam trên thị trường quốc tế (LÀ tiến sĩ)Tiềm năng của chè Việt Nam trên thị trường quốc tế (LÀ tiến sĩ)Tiềm năng của chè Việt Nam trên thị trường quốc tế (LÀ tiến sĩ)Tiềm năng của chè Việt Nam trên thị trường quốc tế (LÀ tiến sĩ)Tiềm năng của chè Việt Nam trên thị trường quốc tế (LÀ tiến sĩ)Tiềm năng của chè Việt Nam trên thị trường quốc tế (LÀ tiến sĩ)Tiềm năng của chè Việt Nam trên thị trường quốc tế (LÀ tiến sĩ)Tiềm năng của chè Việt Nam trên thị trường quốc tế (LÀ tiến sĩ)Tiềm năng của chè Việt Nam trên thị trường quốc tế (LÀ tiến sĩ)Tiềm năng của chè Việt Nam trên thị trường quốc tế (LÀ tiến sĩ)Tiềm năng của chè Việt Nam trên thị trường quốc tế (LÀ tiến sĩ)Tiềm năng của chè Việt Nam trên thị trường quốc tế (LÀ tiến sĩ)Tiềm năng của chè Việt Nam trên thị trường quốc tế (LÀ tiến sĩ)

NGUYEN THI SINH CHI

(English Name: MARIA)

Potential of Vietnam tea

in the internation market

A RESEARCH PROPOSAL PRESENTED TO THE FACULTY OF GRADUATE SCHOOL SOUTHERN LUZON STATE UNIVERSITY LUCBAN, QUEZON, PHILIPPINES

THAI NGUYEN UNIVERSITY S.R VIETNAM

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE

DOCTOR IN BUSINESS ADMINISTRATION

Name: Nguyén Thi Sinh Chi

English name: Maria

Advisor: Dr Nelly L Mendoza

2013

First, I would like to sincerely thank Dr Nelly L Mendoza who was dedicated to guide, encourage and help me overcome the difficulties in the course of study to complete my

thesis

I would like to express deep gratitude to the teachers of the SOUTHERN LUZON

STATE UNIVERSITY lectured, contributed many valuable comments, help me a clearer

orientation in the process of implementation and completion of the dissertation I also would like to thanks to the teachers of the International Graduate Study Programs have facilitated rapid help in terms of procedures, processes during the course of the dissertation

I would like to thank to the Managing Board of University of Social Labor Affairs has

facilitated support in terms of time for me to complete the course

Please be affectionate towards friends, colleagues, was always encouragement, help and support me throughout the process of doing the thesis Sincerely thank Mr Phan Minh

Thuy, Deputy Head of the legal department, Vietnam Chamber of Commerce and Industry (VCCI), Vietnamese enterprises were answer survey investigation, leaders of enterprises were willing to help and provide the data, documentation, figures related to the subject Finally, please send your profound gratitude to the loved ones of the family had be always side by side, encouragement and motivation helps me overcome difficulties to complete the thesis

Sincere thanks!

The Author

Nguyen Thi Sinh Chi

1.6.2 Concept of the world market entry strategy

Chapter Il: REVIEW OF RELATED LITERATURE AND STUDIES

2.1 Significance of planning the world market entry strategy of a sector for

2.2.7.1 International product strategy

2.2.7.2 International pricing strategy

2.2.7.3 International distribution strategy

2.2.7.4 International promotion strategy

2.3 Research on experience lessons of successful tea exporting countries in the world

and lessons learned for Vietnam

Chapter Ill: RESEARCH METHODOLOGY

3.1.3 Methods of data collection, processing and analysis

Chapter IV: PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA

4.1 Research on the production, export and import of tea in the world «35 4.1.1 General overview of the tea industry 35 4.1.1.1 The major products of the tea industry in the world trading 35 4.1.1.2 Standard Requirements for tea exports 36

4.1.1.3 Standard Requirements for tea eXpOrtS

4.1.1.4 Analysis of competition in the world tea industry

4.1.2 The situation of production and export of tea and analyzes the competitive

advantage of countries exporting tea,

4.1.2.1 The situation in the world tea production a)

4.1.2.2 The situation in the world tea exports we Al 4.1.2.3 Analysis of the competitive advantage of tea exporting countries .42 4.1.3 Tea import situation, analyze the factors that affect the size and price of imported tea and segment of the world market for tea products đÓ

4.1.3.1 Overview of world tea import situation

4.1.3.2 Analysis of factors affecting import scale and import prices of tea importing

4.2 The situation of Vietnam's tea production

4.3 The situation of Vietnam's tea expott we DS

4.3.3 Regarding export markets

4.3.4 About enterprises involved in exporting tea

4.4 The situation of the world market penetration of Vietnam tea

4.4.1 The objective of market penetration of the world in time for tea

4.4.2 Status of research activities tea export market and identify your target market63

4.5.1 The importance of these factors constitutes the competitiveness for Vietnamese tea

76

export industry (determination of weights)

4.5.2 Analysis of the elements of Competitive capacity of exporters Vietnam tea 77

4.5.2.3 Competitiveness of manufacturing technology

4.5.2.4 Competitiveness of human resources

4.5.2.11 Competitiveness of the brand

4.5.3 Integrated assessment of Competitive capacity of exporters Vietnam tea 83

we 84

4.6 SWOT Analysis of Vietnam's tea export

CHAPTER V: FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

5.1 Strategic goal of penetrating the world market for Vietnam's tea products in 2020

5; For types of green tea packaging under 3 kg packaged green tea Type 02

5.4 Marketing Mix Strategy for tea export products of Vietnam 104 5.4.1 Strategy for Vietnam tea produCts .‹- «+ 104 5.4.2 Pricing strategy for Vietnam tea products we LOS 5.4.3 Distribution strategy for Vietnam tea products 106

5.4.4 Promotion strategy for Vietnam tea products 107

5.5 The implementation of strategic solutions penetrate the world market for

5.5.1.3 Solutions to improve capacity planning, implementation strategy

5.5.1.4 Solution for research and development „ 112

5.5.1.5 Solution of branding for Vietnam tea products

5.5.1.6 Solutions to build linkages between actors in the value chain of the tea industry.114

5.5.2 The solution Supports wig TTS

5.5.2.1 Solution of training and development of human resources a 1S 5.5.2.2 Financial Solutions - 116 5.6 Recommendations - 116 5.6.1 For State 116

5.6.1.1 The policy plannings resource development raw material 116 5.6.1.2 The policy to support the development of export markets «LIT

LIST OF SYMBOLS AND ABBREVIATIONS

EFW Economic Freedom of the World

GAP Good Agricultural Practice

GCI Global Competitive Index

GDP Gross Domestic Product

HACCP Hazard Analysis and Critical Control Point System

IGG Intergovernmental Group on Tea

RCA Revealed Comparative Advantage

SWOT Strengths, Weaknesses,Opportunities, Threatens

LIST OF TABLES

Table 2-1: Useful data for market selection 14

Table 2-2: Description of evaluation matrix for the enterprise’s internal factors 22

+ 40 Table 4-1: Planting area of each continent in 2000-2009 (1000 ha) Table 4-2: Export turnover of tea of the world, classified by type of tea (million USD)

Table 4-3: List of countries exporting tea into groups Table 4-4: Some characteristics of the group of countries exporting tea Table 4-5: Import prices of 05 tea importing countries having highest import prices in 2005-2009 (USD/kg)

Table 4-6: Results of world market segmentation

'Table 4-7: Area, products and exportation of Vietnam tea -. ‹-‹ 54

Table 4-8: Structure of exports tea of Vietnam (2008-2001 1) . :- 56

Table 4-9: Average prices of Vietnam's tea export and of the world (USD / kg) 56

Table 4-10: The Major Export Markets of Vietnam Tea Products (million USD) 57

Table 4-11: Some average indicators of Vietnam's tea export in the period of 2005-2009 according to the World Market Segmentation

Table 4-12: The leading tea exporters of Vietnam in 2012 -. :-5-+-+ 60 Table 4-13: One of the specific targets of the tea industry the period of 2000-2010 61 Table 4-14: Some average indicators of Vietnam exported green tea packed more than 3kg the period of 2005-2009 according to the World Market Segmentation 69

Table 4-15: Some average indicators of Vietnam exported black tea packed more

than 3kg the period of 2005-2009 according to the World Market Segmentation 69 Table 4-16: Results of survey of importance of the elements made up the

competitiveness of Vietnam tea export industry

Table 4-17: Matrix on competitive capacity of Vietnam tea exporters

Table 5-1: Some targets for production and exportation of tea industry

Table 5-2: Some of the characteristics of each market segment for this type of

black tea packaged on 3 kg

Table 5-3: Some of the characteristics of each market segment for this type of

green tea Pack on 3 kg

Table 5-4: Some of the characteristics of each market segment for this type of

- 104 black tea packing under 3 kg

Box 4-4: The role of brand tea - Tea olong

Box 4-5: Build Vinatea's direct distribution channe

Box 4-6: "Taste for tea of each country”

RATING SHEET

1.1 Introduction

Vietnam is considered to be the cradle of the world’s tea plants, ranks the 5'" in the world for tea cultivation and processing and the 8" for annual tea export However, building and spreading Vietnam tea brand is almost open Any enterprise can produce and

process tea depending on their capacity Most of the exported products are only in the rough and unbranded form, causing the Vietnam tea to be confused or named under large

foreign tea firms Nearly half a century for exporting tea to the world market, only a symbol of three tea leaves with the trade name "Vinatea" helps the importers know Vietnam tea

At present, Vietnam's tea export is still concentrated in big markets such as

Pakistan, Taiwan, Russia, Afghanistan and China Ten countries with high tea import turnover from Vietnam in 2012 reached 224.6 million USD, accounting for 73 % of total

tea export turnover Specifically, in 2012, Pakistan was the biggest tea export market of Vietnam, reaching 45.3 million USD, accounting for 20.1 % of the total tea export turnover

of Vietnam Secondly, it was Taiwan where Vietnam’s tea export turnover reached 29.5 million USD, accounting for 13.1 % of the total tea export turnover of Vietnam Thirdly, it was Russia where Vietnam’s tea export turnover reached 21.6 million USD, accounting for 9.6 % of the total tea export turnover of Vietnam Only tea export turnover to these three markets accounted for 42.9 % of total tea export turnover of Vietnam Furthermore, if comparing 10 major export markets occupying about 90% Vietnam's tea export turnover in the early 2000s to those nowadays occupying about 73%, it is possible to indicate that the diversification and expansion of market of tea-exporting enterprises is limited and such expansion has not been diversified in depth

1.2 Background of the study

Although tea plants have been grown and consumed in our country for so long, the domestic tea market now accounts for about 20% Thus, the majority of Vietnam's tea products are mainly consumed by the world market with 80% of Vietnam's tea output Because Vietnam tea products are mainly consumed by the world market and relied on a

few key export markets, they are exposed to market risks This situation can be seen clearly

exports) and its collapse has caused great loss to tea-exporting enterprises and tea sector of

Vietnam This shows that although in recent years the tea export market has been

expanding, the Vietnam tea-exporting enterprises have not established stable and strong markets for export development Consequently market diversification is urgently required for the tea sector as well as for the tea-exporting enterprises in Vietnam

Moreover, one of the major tea import markets in Vietnam is India, where is now

slowed down, while in previous years, the largest tea producing country in the world still

imported more thousands of tons of tea a year, including Vietnam tea for processing There are many markets refusing to import Vietnam tea such as Ireland, Belgium, Denmark,

Korea, Hong Kong, France and Sweden due to poor quality products During the last time, although tea-exporting enterprises have made efforts to diversify the market and in fact we

have entered some new markets, the volume and value of export is very limited

In addition, the export performance of tea-exporting enterprises in Vietnam is very low This represents the distance between the world tea price and Vietnam’s tea export price is quite high, ranging from 50-70% depending on each kind of tea

According to the general report on development of the tea sector in ten years (1999-

2009) at "the second International Conference on Vietnam Tea" which was held in July,

2010, for the last ten years, the targets of tea output, export volume, average yield and material region area have been achieved or exceeded However, the noteworthy issue was the continuous decrease in export tea price The price of Vietnam's export tea in June, 2010 was only 1.4 USD/ kg, while in 1998, it was 1.52USD/kg This price gap is getting wider than the average price in the large auctions in the world In 2009, while the average tea price in such auctions increased to 2.43 USD/kg, the Vietnam’s tea price was only 1.23

USD/kg

Thus, from 1998 until now, the average export tea price in the world has increased

by 18%, but the price in Vietnam has reduced 20% Therefore, in spite of ranking the fifth

in the world for tea export, the price is lower than the average price in the world, Vietnam tea brand has not been widely known and particularly the income of tea growers is not improved

Vietnam tea sector as well as tea-exporting enterprises to overcome and to improve the

efficiency of export, and increase income for tea growers and effectiveness of the tea sector

in general

The fact that Vietnam tea industry is facing significant challenges such as low

competitiveness, specificly product quality are not homogeneous, low added value, the

distributing system is not complete , the brand is still faint, Therefore the analysis, assessment and putting forward solutions to improve the competitiveness of Vietnam tea products is a matter of necessity

Stemming from the above reality, this thesis studies on “Potential of Vietnam tea

in the internation market” to help Vietnam tea exporting enterprises develop comparative

advantages, overcome disadvantages, in order to improve the efficiency of tea exports

1.3 Statement of the Problem

The dissertation does research into scientific and practical basis on the exports market entry strategy planning for Vietnam tea products until 2020, potential of Vietnam tea in the internation market, from which it proposes the world market entry strategy for Vietnam tea products to help Vietnamese tea-exporting enterprises penetrate stable and steady markets in the world

Research questions:

The study aimed to answer the following questions:

1 What is the current status of tea production and export as well as world market penetration of the Vietnam tea sector?

2 Which components of competitiveness are most important for tea-exporting enterprises in Vietnam?

3 What market strategy shall be used to enter the world market for the tea sector

in Vietnam?

Specific objectives

Specifically, the research targeted to:

- Analyze and evaluate the status of supply and demand, import and export of tea

in the world market;

- Present experiences and lessons learned of successful tea-exporting countries in

the world;

- Analyze the factors affecting tea import scale and price of tea-importing countries

and segment the world market for tea products;

- Analyze and evaluate the status of Vietnam's tea export;

- Analyze and evaluate the world market entry of Vietnam tea;

-Analyze and determine the competitiveness of Vietnamese tea-exporting

Enterprises;

- Analyze and assess strengths, weaknesses, opportunities and threats for Vietnam’s export tea sector;

- Propose the world market entry strategy for Vietnam's tea products; and

- Propose solutions to implement the world market entry strategy for Vietnam's tea

products

1.4 Significance of the study

The contribution of this thesis is in the formulation of strategies to enter the world

market of Vietnam's tea products by 2020 The thesis is expected to systematize the framework of planning the world market entry strategy for the tea sector The thesis will generally outline the world tea market and Vietnam’s tea production and export situation Basically, it shows the basics of the world market penetration of Vietnam tea during the last

time; identifies strengths, weaknesses, opportunities and threats for Vietnam's export tea;

and determines competitiveness of Vietnamese tea-exporting enterprises

The author also describes a number of recommendations to the State, Vietnam Tea Association and for businesses to help Vietnam tea industry can more effectively penetrate into the world market

In this thesis, the author only studied the exporters and importers in view of the new national and strategic planning to enter the world market for the products of Vietnam's tea industry perspective Each specific business on the basis of this strategy will further research on specific commodities, competitors and customers to conduct specific entry This is limited and further research directions of the thesis

1.5 Subject and scope of research

1.5.1 Subject of research

1.5.2 Scope of research

- Space: The thesis researches on the world market entry strategy for Vietnam's tea

products in the importing countries with average tea import scale of from 250 tons /year

and above

- Time: Time for surveying and collecting data is updated to 2012

1.6 Definitions of terms used in the research

According to Michael Porter (1996), the strategy is to create a harmony between activities of a company, which produces the valuable and unique position The essence of strategy is to create difference in competition According to him, the strategy is to create a unique and valuable position, including differentiation and exchangeable choice in order to gather the best resources from which to create advantages for the organization

According to Johnson and Scholes (1999), strategy is to identify direction and scope

of activities of an organization in the long run, in which the organization must achieve competitive advantage through the combination of resources in a changeable environment

in order to best meet the needs of the market and the expectations of the agents involved in

- Where will business activities take place in the long run? (orientation)

- Which markets will business activities compete in and which scope of activities?

(market and scope of activities)

- How can business activities be conducted better than competitors in the market?

(advantage)

- Which resources (skills, assets, finance, personnel, technology, brand, etc) are

required to create competitive advantage? (resources)

- Which factors of the external environment do affect the competitiveness of the

enterprise? (environment)

From the above issues, the author believes that proper strategy has to be set to

achieve the organization’s basic long-term goals However, ways to achieve such goals in

the best manner are always based on the organization’s strengths and weaknesses in the context of opportunities and threats."

Opinions on the definitions of strategy mentioned above mainly refer to the strategy for an organization and an enterprise, thus, they may apply to a specific sector or more According to the author, the concept of strategy above can be applied to a specific sector because that strategy has firstly appeared in the military art with its meaning as a way to win a war Similarly in business, it is a must to indicate the way to develop, compete and win competitors In the author’s opinion, ''strategy of a sector is a combination of its basic long-term goals and implementation ways to achieve such goals in the best manner, based on the strengths and weaknesses of the sector in the context of opportunities and threats."

1.6.2 Concept of the world market entry strategy

There are many criteria to classify strategy; according to criteria of corporate strategy levels, the strategy is divided into three levels: corporate level, business unit level and functional level Currently, with the trend of globalization, many companies change their operation directions out of the national borders and it is said to a fourth strategy level that is global strategy

At corporate level, there are many strategies with different names, each author can

classify and name by their own way According to Fred R David, the corporate level

in the existing markets with greater marketing efforts However, in this thesis, the world market entry strategy is not approached by the concept above The author approaches the world market entry strategy from the point of view of international marketing

From the point of view of international marketing, according to Nguyen Dong Phong and his colleagues (2007), the world market entry strategy is regarded as a

marketing program used for product/market Content of the world market entry strategy basically comprises the following specific decisions:

- The company's objective to enter the world market

- Choice of appropriate target market to penetrate

- Selection of the world market entry methods

- Marketing mix strategy planning

- Distribution of resources to implement the strategy

- Organization for implementation of the strategy

- Supervision of the implementation of the world market entry strategy

According to Tran Minh Dao and Vu Tri Dung (2007), the world market entry strategy includes decisions as follows:

- Define the company's objectives to enter the world market

- Select the market for penetration

- Select the market segments

- Analyze competition: analyze business lines and competitive advantage of

countries

- Select competitive strategy

- Select methods of market entry

- Build Marketing Mix strategy

Thus, the world market entry strategy is now often understood as a system of opinions, orientation goals of business strategies, ways of the world market entry and marketing strategies to bring products to effectively and steadily penetrate the world market In other words, in planning the world market entry strategy, enterprises must make strategic decisions related to things such as: selecting competitive strategy in the world

From researches on the concept of strategy and world market entry strategy said

above, according to the author it is possible to draw the concept of world market entry

strategy for a specific sector as follows: "it is a set of basic long-term goals of such sector

in participating in the world market, a system of opinions and orientation goals of business strategies, ways to penetrate the world market and marketing Mix strategies

in order to take its products to effectively and steadily enter the world market, thereby achieve the objectives of the sector in the best manner."

REVIEW OF RELATED LITERATURE AND STUDIES

Many studies have been done concerning tea plants particularly on technical aspects

such as seed selection, propagation, irrigation, processing equipment, fertilizer, food safety,

plant nutrition; technological process, tea production organization and management with safety and high quality

However, with the growing demand of the tea industry, some researchers explored

other areas to include economic themes

PhD Nguyen Huu Khai (2005) "Vietnam tea plants: Competitiveness in export and

development" The author introduces the origin and development process of tea plants in

Vietnam; makes general comments on tea markets in the world to draw lessons and

experience; gives important forecast of supply, demand and price of tea for the years in early 21" century; and builds solutions to enhance the competitiveness of Vietnam's

research and development of trade networks and trade promotion policies

Phung Van Chan (1993), head of the project "Production economy and tea export" The project focuses on analyzing the status and viability of tea production in Vietnam, and

the socio-economic solutions to develop tea production in Vietnam

PhD Nguyen Thi Nhieu (2006), head of the project "Market-Marketing research in Vietnam's tea export." The project focuses on analyzing characteristics and development trends of the world tea market, and marketing elements in tea export; researching marketing experience for tea export of some countries; and proposing marketing solutions of

Vietnam's tea export by 2015

It can be said that the projects above research the tea sector either from the view of

export competition or the view of each production facility, but there are no projects

systematically doing research on the world market entry strategy for Vietnam's tea

products

The thesis is expected to systematize the theoretical framework of planning the world market entry strategy for a sector The thesis will generally outline the world tea market and Vietnam’s tea production and export situation On the background of this

picture, it shows the basics on the world market penetration of Vietnam tea during the last

time; identifies strengths, weaknesses, opportunities and threats for Vietnam's export tea; and determines competitiveness of Vietnamese tea-exporting enterprises

The contribution of this thesis is the application of research methods to plan the world market entry strategy for Vietnam's tea products by 2020, having a part in answering

the key question as follows:

What are characteristics and competitive advantages of tea exporting countries in

the world?

What factors do affect the size and price of tea import of tea importing countries? Which criteria are the world tea market segments followed?

How are characteristics of each market segment?

How is the situation of the world market entry of Vietnam tea in recent years?

Is competitiveness of Vietnamese tea exporters strong or weak? Please specify? What are strengths, weaknesses, opportunities and threats for Vietnam’s export tea sector like?

Which competitive strategy is appropriate to Vietnam’s tea sector?

On that basis, the thesis proposes the world market entry strategy (including objectives, views, Marketing-mix strategy, solutions to execute the strategy, etc) of

Vietnam's tea sector In addition, the thesis also makes recommendations to the State,

Vietnam Tea Association and enterprises to implement the solutions above

Strategy and solutions to implement the strategy are research documentations and suggestions for Vietnam’s tea sector and tea-exporting enterprises can apply to improve the efficiency of tea export

Stemming from the research subjects and objectives mentioned above, the thesis uses the inductive methodology in researching and planning the world market entry strategy for Vietnam's tea products

The research process of the thesis is summarized in the following diagram:

Objectives of research:

Planning export market entry

strategy for Vietnam's tea products

Theoretical research on planning the

world market entry strategy of a sector

[Analysis of the supply: Analysis of the demand: |Analys of Vietnam’s tea sector

Lessons learned by the tea} } Analysis of competition in the) |- Assessment of Vietnam's teal

exporting countries world tea sector production and export situation

Analysis of the situation of} } Analysis of tea import situation} | Analysis of situation of world]

lea production and export in} _ jin the world Imarket penetration of Vietnam tea

he world

| Determination of the factors} } Assessment of the}

Analysis of the competitive] affecting tea import scale and! competitiveness of tea exporting

jadvantage of tea exporting} [price in tea importing countries enterprises in Vietnam

Building export market entry strategy for Vietnam’s tea

The first part researches the scientific basis of planning the world market entry

strategy of a sector and experience lessons of successful tea exporting countries in the world, and lessons learned for Vietnam

2.1 Significance of planning the world market entry strategy of a sector for

development of national economy

Strategic planning to enter the world market comes from the analysis of the external environment, internal environment to find out the appropriate strategy, promoting the industry's strengths, overcome weaknesses, receive the opportunity to avoid the risk of

damage from the external environment Thus, through a market penetration strategy world

of commodities is completed in an efficient manner in order to promote exports in a sustainable manner, while creating a foothold for the product of a nation in the international

arena

Present trend of globalization has prompted the company to expand business

operations from a national border Practice has proved many international companies participating in the world market, especially small companies face issues such as lack of capital, lack of experience, skills, market research, unforeseen risks related to international globalization of business activities and not have a good preparation for the internationalization These matters often lead to failure to cope with the demands in the international business Therefore, the strategy to enter the world market for commodities will require businesses to strategize direction, plans, methods and measures for them to enter the foreign markets

In an industry often have many units and organizations involved For example, to create a complete package of tea export in the world market, there are many factors involved in the supply chain To create a complete package of this tea supply chain, we have the tea growers, the collectors, the unit processing, packaging and the export traders Each agent while pursuing his own goal, to profit, can affect the interests of other agents and thus affect the link between these agents and reduce the efficiency of the whole industry Thus, through a market penetration strategy world of commodities will help coordinate resources efficiently, increasing linkages among actors to achieve common goals of most efficient industry

In addition, strategic planning penetrate the world market of commodities is also a

tool for policy advice to governments, policy makers When strategic planning penetrate

the world market, we have to check the method, how to enter a market ahead of the

business as well as other foreign businesses in the target market Since then brought out the best way to help businesses enter the market effectively and sustainably Besides also make

suggestions and recommendations to governments, stakeholders, and policy makers to

revise and supplement policies improve the system, the system of economic management,

trade in order to maximize the potential of the business, ensuring that the business world to

enter the market in a better way

2.2 The world market entry strategy planning

2.2.1 Determination of the world market entry target

There are many reasons, motivating businesses, industries operating in the world

market, as follows:

First, the exploitation of comparative advantage in international trade The theory

of comparative advantage shows that different countries have different labor productivity It

is maybe due to the potential of natural and economic - society, the level of specialization, and the capability to acquire different techniques So the country has its own advantages and disadvantages in the production of goods or services Through foreign trade activities, each country can capitalize on her advantages; minimize the negative impact of her disadvantages and limitations; thereby improving the country's economic situation

Second, find new markets, expanding consumer markets Currently, Vietnam has potential for development of her organic agricultural production But the purchasing powers of the market mechanism curb production This situation can be remedied if Vietnam will extensively seek an export market development to encourage production

eventually improve the lives of the farmers and resolve other production problems

In addition, the level of competition in the domestic market is becoming increasingly fierce; businesses are forced to seek new markets, and expanding market However, because of the level of competition in the homogeneous regions, countries governed by many business factors, find ways and means to improve the competitiveness and reputation of their businesses They look for potential markets externally to avoid competition in existing markets

Third, exploiting the advantages of the product life cycle The life of a product is often different markets, different countries Therefore, a product in this market in a

recession, rejection prepared, but when switching to a new market, the product was

"rejuvenated"

Thus we can see a lot of goals entering the world market, depending on the characteristics of each sector, each business that have different options

2.2.2 Selection of the target market

2.2.2.1 Information collection for market selection

Collecting market information in many different countries is a great task After collecting necessary information, it is a must to apply a reasonable and strict method in

accordance with the structure to choose the market Obviously, this is very important to eliminate the markets with less promising opportunities for success, but it should be careful

to not too hastily miss out the countries with real potential To choose the market, there is plenty of information to be collected, as following:

Table 2-1: Useful data for market selection

+ Geographic range - Professional uncertainty of employee

- GDP, GDP per capita by social groups - Population growth rate

+ Situation of balance of payments, current - Lifestyle

and future foreign exchange restrictions - Consumer tastes

- Management of foreign currency - Average family size

- Tariff and non-tariff barriers - Average age of population by region

- Import structure, import growth rate - Belief grouping

- Political stability - Language

- Consumption expenditure by volume and + Literacy rate

products - Education time in school

- Salary by sex and occupation type - Health care

- Total population - Death rate

- Proportion of population in individual age | - Doctors per 1000 population

and income quintile - Advertising costs

+ The proportion of urban versus rural - Prices of competitors

+ Quality and convenience for distribution channels in penetrating

Source: Tran Minh Dao and Vu Tri Dung (2007)

Next, it is necessary to establish certain standards depending on the company’s

objectives and conditions to remove countries with less promising opportunities for

success These standards may include market size, population structure, economic development, business environment, political stability and etc

2.2.2.2 Methods for target market selection

According to Anderson & Buvik (2002) and Cavusgil & colleagues (2004), there are two approaches to select the international market for penetration, which are systematic

and non-systematic approaches

Non-systematic approach is the way which companies choose the world market to

penetrate at random or by accident, or they choose the market on the basis of minimizing historical and psychological differences

Systematic approach is the way which companies choose the world market for

penetration using statistical methods and a variety of data to assess the attractiveness of the

target market In other words, systematic approach is use of objective standards to select the international markets such as using market research methods in a systematic way, and statistics in analyzing, evaluating and selecting the world markets Thus, according to the

systematic approach, the marketing researchers of international companies must collect

information more systematically and analyze a set of more markets than the non-systematic approach

Some following methods are often used in accordance with the systematic approach

to select the target market

- Grouping countries

According to this method, countries which have similarities such as economic environment, culture and politics will be grouped together After grouping, the countries which are in a same group will have same characteristics and needs

The essence of grouping countries is to segment the world market for importing countries This means that the importing countries which have import scale, economic characteristics, culture and needs are put in a market segment

Grouping countries with same characteristics will help the international marketing researchers compare countries with each other and provide information to build common entry strategies for each market segment

Cavusgil and colleagues (2004) use secondary data of 90 countries to group market

Authors use variables such as percentage of government expenditure compared to total

national output, the size of the underground economy, intellectual property rights, and wage

and price control policies to group countries

- Ranking countries

The second method to select the target market is the ranking of countries By this method, the researchers will rely on various criteria such as economic development level,

market structure, market capacity, growth rate of market, population size, infrastructures,

easy-to-acceptance of market, free market and national risk degree Each criterion has a

different weight depending on the assessment of international companies and market

researchers Each country will be calculated, obtained an aggregate score and ranked based

on this score

2.2.2.3 Selection of methods to chose the target market

First of all, this thesis uses the systematic approach in selecting the target market for penetration

The use of one or two variables (for example, economic or cultural) and then more

improvement of other studies by adding more variables cannot represent all factors affecting the buyers’ purchasing decisions In other words, there are not much experimental evidence indicating the impact of these variables on changes in needs and market structure

of specific products and services

Due to lack of exact experimental evidence demonstrating the impact of variables

on demand and market size, according to the author, grouping the world market or ranking countries may face two serious constraints: (1) selection of variables for grouping or ranking is often in the direction of intuition, based on subjective judgments of the researcher, (2) a large number of variables representing national environments such as economic, legal and cultural environment that will be used as variables for grouping international markets or ranking countries

Whereas when determining and selecting the target market, international marketers are very interested in how the market size of importing countries as well as the price of importing countries may change through each group of countries, and what factors and how influence this change When determining the important factors affecting the change in the

market size and the import price of countries, then grouping countries according to these

factors is meaningful and useful for international companies

Therefore, to overcome the limitations above in determining and selecting the target market, in this thesis the author will try to find variables that statistically impact on

the market size of the world's tea sector and the import tea price of importing countries To determine these statistical variables, firstly, the list of variables commonly

used to group and rank the international markets will be collected Next, regression analysis

is used, in which the tea import volume and price is the dependent variable and the

variables representing countries and sectors are explanatory variables Statistical significance level of 10% of each explanatory variable in the regression anal is used as

criteria to determine whether such variable affects the import volume and price of each

country or not

After identifying the variables affecting the market size and the price of tea import,

grouping importing countries will be conducted according to these variables by agglomerative hierarchical clustering procedure

2.2.3 Analysis of competition

After identifying the target market, to have a basis for planning effectively

competitive strategy in comparison with competitors, there must be clear and thorough understanding of the structure of business sector and competitors in the market, including clearly identifying the strengths, weaknesses and competitive advantages of competitors

2.2.3.1 Analysis of business sector

According to Michael E Porter, there are five factors affecting competition in the

sector: (1) the threat from the emergence of new competitors, (2) the threat from

substitutive products or services, (3) the bargaining capability of suppliers, (4) the bargaining ability of the clients and (5) the competition between existing competitors in the

sector

The strength of these five factors differs between sectors and decides long-term

profitability of the sector These five competitive factors decide the profitability of the

sector because they fix the price sold by and the cost incurred by enterprises and the investment required to compete in the sector For example, the threats from new competitors restrict the common profit potential of the sector Powerful suppliers or buyers

lower their own profit The fierce competition reduces profit because the expenses for

competition are higher or a part of profits is transferred to customers in the form of cheap

price The emergence of substitute products limits the price that competitors can sell

without causing substitution

Every sector has its own characteristics and a unique structure Sector structure is

relatively stable but is able to change over time when the sector develops The sector

structure is very important in international competition because of some reasons First, it

creates different requirements for success in different industries Second, the structural change creates real opportunities for competitors from a country entering new industries 2.2.3.2 Analysis of national competitive advantage

2.2.3.2.1 Determinants of national competitive advantage

- Conditions of production factors

- Conditions of demand

- Auxiliary and relevant industries

- Corporate strategy, structure and domestic competition

- Contingency (or opportunity)

- Role of government

2.2.3.2.2 Factors creating national competitive advantage for tea sector

According to Michael Porter's diamond model said above, the national competitive advantage is formed from the group of factors such as conditions of production factors, demand conditions and auxiliary industries In this section, we will explore how these factors impact on the tea sector

* Conditions of factors of production

Like other crops, for the tea industry, the country with good soil, suitable soil, and

irrigation system will have an advantage over the competition This can be seen most clearly is the case of Kenya, this country has large land suitable for tea production

combined with its climate that makes tea grow abundantly

The availability of qualified human resources, management capacity also creates certain advantages, for example in Kenya, many companies, tea plantations are managed by multinational companies and industry Kenya tea has learned a lot of experience in management, marketing tea products on the world market

The ability to access capital is a quite important factor in the tea industry Sri

Lanka's tea industry stagnate for some time due to lack of capital investment in the 80-90

years of the last century, Sri Lanka's tea industry rise only after a series of private

companies to start investing the major tea growing in field

After harvest, fresh tea leaves must be quickly transported to the processing to

avoid reducing the quality of the tea, so the road system, transportation infrastructure plays

a very important role

* The condition of demand

Tea is a popular drink in Kenya, about 80% of Kenya's population regularly drink tea, but most people drink tea ordinary Kenyan, moderately priced The main thing that a

lot of companies produce and distribute packaged tea in Kenya and furthermore the

company has established business relationships with many multinational companies in the world providing tea Therefore Kenyan tea firms are experienced in meeting the needs of

the importing country tea, tea is the most moderately priced

Conversely, due to the diverse needs of people in the country, the Indian tea

industry has developed and created a lot of different types of tea to meet domestic demand and thereby to penetrate the world market, the Indian tea companies have discovered the niche very well

* The industry and related Auxiliary

For the tea industry, supporting industries and related sectors are mostly processed and packaged tea For example, in India and Sri Lanka in the 90s last century, there was a significant growth of the domestic packaging industry, which has helped to India and Sri Lanka have the ability to boost exports of products and packaged tea brands

* Firm strategy, structure and competitive local

At the tea plantations, methods, management methods are very different from other sectors For example, in Sri Lanka and India, many generations of tea plantation workers live and work at the plantations In addition to the tea industry to large employers, to labor management practices greatly influence the price of the product Thus the method of recruitment, labor management usually can not match the tea industry, requiring separate management methods and in accordance with the tea industry

The competition, the competitive environment in the country also affect competitive advantage For example, in Sri Lanka, when the plantations under the management of the government, no invention, no significant improvement but since practical implementation

of privatization in the early '90s was there is a significant change for the tea industry of Sri

Lanka

+ The role of Government

The government's policies have a huge impact on the development of tea industry in

a number of countries Such liberalization policies in the tea industry of Sri Lanka in 1992, the government does not control the price of tea proceed as before, abolished export duties, currency devaluation, transfer ownership of the plantations state ownership has made Sri Lanka's tea industry has thrived then

2.2.3.2.3 Analysis of the competitive advantage of tea exporting countries

In order to obtain the basis for planning the competitive strategy for the tea sector, it

is necessary to clearly understand the characteristics of competitive advantage of tea exporting countries, from which grouping tea exporting countries according to similar

characteristics of competitive advantages of each country Thus, the tea exporting countries

will be grouped by similar characteristics of competitive advantage that will help compare the competitive advantage between them

To be able to analyze the competitive advantage of tea exporting countries, after

studying factors affecting the national competitive advantage for the tea sector and

combining with the researches of Jaffee & Gordon (1992) and Ali, Ghoudhry & Lister (1997), the list of variables presenting the elements in Michael Porter’s diamond model is

collected

Next, tea exporting countries is grouped according to criteria of export output scale, export tea price and tea growing countries After grouping, statistical tools are used for analysis The variables representing different characteristics of competitive advantage with statistical significance of (10%) was used in hierarchical cluster analysis to group tea exporting countries

2.2.4 Analysis of competitiveness

Tn this thesis, the author used the matrix method for evaluation of internal elements

of Thompson - Strikland to analyze the competitiveness of Vietnam’s tea exporting enterprises The steps of applying this method are as follows:

Step 1: A list of about 10-20 determinants of enterprises’ competitiveness in a sector is prepared These are the enterprise’s internal elements, excluding the external

environmental factors The most important factors may be listed as follows:

- Enterprise management capacity

- Research, analysis and forecast capacity of domestic and foreign markets;

- Ability to find customers and trustful partners being capable of effective business

cooperation with enterprises;

: Organizational capacity to produce goods with competitiveness in the domestic

and international market;

- Enterprise culture

- Adaptability and innovation

- Ability to handle situations of international commercial disputes quickly and efficiently;

: International payment capacity

- Organization capacity for export

- Technological factors such as research capacity in technology, innovation

capability and information technology application;

- Factors related to human resources: highly qualified and professional personnel, quality management know-how and expert team in product design or important technology;

- Financial factors

- Elements of image and reputation (brand)

- Competitiveness of prices and costs

Step 2: The importance of factors for the sector is determined by sorting from 0.0 (unimportant) to 1.0 (most important) for each factor

This weight is to show the relative importance of factors for success, competitiveness of enterprises in the sector Total importance of all factors must be 1.0 Step 3: Classification from | to 4 for each representative factor is made, from

weakest (1 score) to strongest (4 scores) These scores reflect the competitiveness of each

element of the enterprise compared to competitors’ in the business sector It is also possible

to give a wider range of score, for example from | to 5

Step 4: Score for each factor is computed by multiplying the importance of that

factor and the corresponding classification score

Step 5: Total score for all factors is taken into the matrix by adding score of the components of competitiveness of enterprises

The total score indicates the absolute competitiveness of enterpris'

Table 2-2: Description of evaluation matrix for the enterprise’s internal factors

Weight Rank (1 to 4)

Factor score Factor (0.0 to 1.0)

Source: Phan Minh Hoat (2007)

If total score of all factors is taken into the matrix of 2.5 or more, the enterprise’s

absolute competitiveness is above average In contrast, the total score in the matrix is less than 2.5, the enterprise’s absolute competitiveness is lower than the average

In case of five-grade scale (from | to 5), the absolute competitiveness at the average

is 3

Evaluation matrix for internal factors helps the enterprises assess their competitiveness in comparative interrelation with competitors in the target market, from which finding the basic advantages to strengthen the competitiveness of enterprises in the market This method allows determining the competitiveness factors that should be

maintained, reinforced and built, which helps the enterprises improve their competitiveness Applying this method, the evaluation steps of competitiveness of Vietnam tea

exporting enterprises are as follows:

- Selection of important factors for competitiveness of Vietnam's tea export

As proposed by Thompson - Strickland, there are 14 basic elements reflecting the

competitiveness of export sector To apply to the specific situation of Vietnam, the author

has researched and consulted tea experts on the appropriateness of 14 criteria proposed by

Thompson - Strickland Thereby, there are 3 less important factors for tea exporting enterprises in Vietnam, or that has been reflected in other factors, namely:

(1) International payment capacity

(2) Enterprise culture

(3) Adaptability and innovation

2.2.5 Selection of competitive strategy

In the long run, the enterprises only succeed in comparison with their competitors if

they have sustainable competitive advantage According to Michael Porter, there are two

types of basic competitive advantages: low cost and differentiation

The combination of two types of competitive advantage with the scope of target market (wide or narrow) or product mix width (wide or narrow) will produce three common strategies: low cost, product differentiation and concentration

- Low-cost strategy

Low-cost strategy is the ability of an enterprise in designing, manufacturing and

launching an equivalent but more effective product to market than that of competitors At prices equal or nearly equal to those of the competitors, lower costs will provide greater profits

- Differentiation strategy

The purpose of the differentiation strategy is to gain competitive advantage by making products that consumers perceive to be unique in their opinions The ability of a company's product differentiation is to satisfy consumer needs in a way that competitors cannot, it means that it can set the prices significantly higher than the average of the sector Differing from the low-cost strategy (based on internal competitive advantage or ability to master the costs), the differentiation strategy relies on external competitive advantage, it means the perfection of product

Strong differentiation capability enables the enterprise to escape the competition pressure However, in order the differentiation strategy to attain the desired results, the product or brand differentiation of company must be aware and sustainable To do this, it requires making every effort in communication In other words, success of the differentiation strategy mostly depends on the marketing quality and effectiveness

- Concentration strategy

Concentration strategy is a combination of two types of competitive advantages and the narrow range of competition This strategy can be accomplished through the key differentiation ability or key low cost

According to Michael Porter, none of strategies may be suitable for all industries Competitive advantage is the foundation of any competitive strategy and in order to achieve

the competitive advantage the enterprises must have choices If an enterprise wants to have

competitive advantage, it must choose a type of competitive advantage (low cost or differentiation) and a scope (spread or key) that it can achieve

2.2.6 Selection of the world market entry methods

According to Nguyen Dong Phong and colleagues (2007), enterprises can implement the world market entry strategy in many different ways, including three popular

methods as follows:

- The world market entry from domestic production

- The world market entry from foreign production

- The world market entry in the free trade zone

2.2.6.1 The world market entry from domestic production

This method of market entry is used by the developing countries in the world to make their products penetrate the world market via export By this method, enterprises can

choose one of two forms of export That is direct or indirect export

2.2.6.1.1 Form of direct export

Under this form of free enterprise direct sales of its products abroad Direct export requires the company to undertake all marketing activities as select export markets overseas appropriate, select the product for the target market, established export department and complete production of documents border

To make direct exports, the business organization in the country should have undertaken and export business formed overseas distribution channels such as branch sales agents, distributors overseas

2.2.6.1.2 Form of indirect export

Indirect forms of export do not require direct contact between foreign buyers and domestic manufacturers To sell products to the world market, domestic producers to rely

on intermediaries with direct export function Enterprises can implement indirect exports through the following modes: Export management company, Export Commission House, Export broker and Export Merchants

2.2.6.2 The world market entry from foreign production

In this method, there are some forms of penetration as: Licensing, Franchising, Management contract, Contract Manufacturing, Assembly Operations, Joint Venture, and 100% foreign capital company

2.2.6.3 The world market entry in the free trade zone

Apart from these two methods for implementing the world market entry strategy,

exporting enterprises can enter the market by methods such as: Special Economic Zone,

Export processing zone and Free Trade Zone

Each method of entering the world market has different advantages and disadvantages Specially, each entry method will correspond to the level of control and commitment of different resources The control level means control of decision-making process for functional activities and strategic decisions of the organization Commitment of resources means the assets committed to use for a certain entry method that cannot take

back to use for other purposes without losing the value

Choosing the method of the world market entry of a company for a certain product

or a market is the result of evaluating several different factors Some standards can be referred to select the method of entering the world market as follows:

- Enterprise’s financial resources, overseas factory acquisition or self-building

- Market entry level to be achieved

- Enterprise’s experience and proficiency in sales and business activities abroad;

- Tax rates, quotas and non-tariff barriers in each market

- Political stability of countries to be entered

- Instability and competition intensity of relevant countries

- Intellectual property rights can be easy or difficult to protect

2.2.7 Marketing Mix strategy planning

After selecting the market for entry, evaluating competitors, and selecting

competitive strategy and appropriate market entry methods, international companies will plan the marketing mix strategy for building marketing strategies adaptable to new environment so that their products can penetrate this market To build marketing mix

strategy, it is often to build following strategies:

2.2.7.1 International product strategy

International product strategy plays an important role because it will affect other

strategies such as pricing, distribution and promotion strategy and consumption and

business efficiency of international companies

Decisions of product strategy in the export market must be derived from customer requirements on product quantity and quality to satisfy their needs and expectations

2.2.7.2 International pricing strategy

ing for a product may be the key to the success or failure because even if the

product, distribution and promotion strategy is rational, the international company will find

it difficult to succeed if the product is priced incorrectly When determining the price, it is necessary to take interest in the factors affecting international prices such as production costs, transportation costs, tariffs, market demand, competition situation and political and

legal influence

In addition, one of important contents of the decision on prices of export products

to determine the relationship between export prices and domestic prices Usually, there are

three possibilities:

Firstly, the export prices are higher than the domestic prices This case often stems from the fact to cover expenses of entering new markets and to take advantage of market opportunities for risk compensation

Secondly, the export prices are equal to the domestic prices This policy is usually applied by inexperienced companies in export, because by the price they feel safe in unfamiliar environment

Thirdly, the export prices are lower than the domestic prices This policy is usually applied in cases where products are unknown or very competitive in price in the export markets

On the basis of evaluating these factors, the international companies will build international pricing strategy suitable to their specific case

2.2.7.3 International distribution strategy

In order for their products to be successfully distributed in different countries, the international companies must investigate and verify the distribution system in accordance with the changing environmental conditions of each country, and consistent with the

context of target market Different markets must have different distribution systems

There are many factors that affect the international distribution activities such as

geographical distance, product characteristics, and international companies’ capability

Based on analysis of factors above, the international companies decide to select

international product distribution channels and manage international distribution system

Besides, the physical distribution of products should be interested to bring products to firmly penetrate the world market

On the basis of analysis, it can come to a decision of selecting the distribution channels

There are often three options:

Firstly: The direct distribution channel is built This channel which is built by enterprises is easy to manage and implement marketing policies but requires high investment and difficult to expand in conditions of less time

Secondly: The independent channels of local country are used Applying this form, the exporters use existing distribution channels in the local country by signing the distribution contracts or applying marketing policies to distribute their products This form requires less investment, and can be capable of very deep and large reach in new market However, its basic disadvantage is difficult to control during the implementation of enterprise’s Marketing strategy

Thirdly: Direct and indirect channels are combined together

The selection of any distribution form is due to characteristics of the market and capacity of the export enterprise

2.2.7.4, International promotion strategy

Promotion is a content of international marketing Marketing activities not only aim

to promote production and distribution of products or services but also provide information

to lead the customer needs to decisions of buying

When building the international promotion strategy, the international companies must decide the following issues:

- What information or message is required to be communicated to customers?

- Which communication media is selected?

- How many costs and efforts are for this activity?