Strategies for business development of TWG chain stores in vietnam

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH - TRƯƠNG NHẬT HOÀNG STRATEGIES FOR BUSINESS DEVELOPMENT OF TWG CHAIN STORES IN VIETNAM CHIẾN LƯỢC PHÁT TRIỂN KINH DOANH CHUỖI CỬA HÀNG TWG TẠI VIỆT NAM LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH HÀ NỘI - 2018 ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH - TRƯƠNG NHẬT HOÀNG STRATEGIES FOR BUSINESS DEVELOPMENT OF TWG CHAIN STORES IN VIETNAM CHIẾN LƯỢC PHÁT TRIỂN KINH DOANH CHUỖI CỬA HÀNG TWG TẠI VIỆT NAM Chuyên ngành: Quản trị kinh doanh Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH NGƯỜI HƯỚNG DẪN KHOA HỌC: TS PHẠM VĂN HỒNG Hà Nội - 2018 DECLARATION The author confirms that the research outcome in the thesis is the result of author’s independent work during study and research period and it is not yet published in other’s research and article The other’s research result and documentation (extraction, table, figure, formula,and other document) used in the thesis are cited properly and the permission (if required) is given The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration ACKNOWLEDGEMENT I would like to express my deep gratitude to the teachers of the Hanoi school of Business and Management, Vietnam National University, especially the teachers who imparted to me a lot of knowledge and helped me Carry out this essay I would like to express sincere gratitude to Dr Pham Van Hong has spent a lot of time, dedicated guidance, only told me during the course of the topic I sincerely thank family, friends and colleagues for encouraging and supporting me in the process of study and research TABLE OF CONTENTS LIST OF ACRONYMS i LIST OF TABLES ii LIST OF FIGURES AND CHARTS iii INTRODUCTION .1 Urgency of the topic Overview of the study Research objectives and tasks 3.1 Objectives 3.2 Tasks Objects and scope of the study 4.1 Objects of the study 4.2 Scope of the study Methodology Organization of the thesis CHAPTER 1: RATIONALE OF BUSINESS STRATEGY OF ENTERPRISES7 1.1 Rationale of strategy 1.1.1 Definition 1.1.2 Role of strategy 1.2 Building business development strategies of the enterprises 1.2.1 Definition 1.2.2 Strategy building process CHAPTER 2: ANALYZE BUSINESS ENVIRONMENT OF TWP IN VIETNAM .24 2.1 Introduction about TWG 24 2.2 Analyze external environment factors 24 2.2.1 Macro factors 24 2.2.2 Sector factors 31 2.2.3 Summary of EFE matrix evaluation 34 2.3 Analyze internal environment factors of TWG Vietnam 36 2.3.1 Quality of human resources 36 2.3.2 Products 37 2.3.3 Financial capacity 39 2.2.4 Market research 39 2.2.5 Marketing activities 41 2.2.6 Synthetize and evaluate IFE matrix 43 2.4 Summarization of opportunities, challenges, strengths and weaknesses in developing TWG tea stores in Vietnam 44 2.4.1 Opportunities and challenges 44 CHAPTER 3: DEVELOP STRATEGIES FOR TWG CHAIN IN VIETNAM.48 3.1 The objectives for business development of TWG in the next time 48 3.2 Analyze matrix and select strategies for developing chain of TWG stores 49 3.2.1 Develop strategies for developing chain of TWG stores using SWOT matrix 49 3.2.2Select the optimal strategic plans through QSPM matrix 53 3.2.3 Process of implementing the strategies 66 3.3 Solutions to implement the selected strategies 67 3.3.1 Additional services with TWG tea 67 3.3.2 Promote activities of marketing and market expansion 68 3.3.3 Improve the quality of human resources 69 3.3.4 Establish marketing department, promote market research 70 CONCLUSION 71 REFERENCES 73 LIST OF ACRONYMS VNPost Vietnam Post Corporation VNPT Vietnam Posts and Telecommunications Group TCBC Postal finance TCT Corporations CBCNV PTI Officers and employees Post Insurance Joint Stock Corporation i LIST OF TABLES Table 1.1: External factor evaluation matrix (EFE matrix) 16 Table 1.2: Evaluation matrix of internal environment factors (EFE) 19 Table 1.3: SWOT mtrix model .20 Table 1.4: Summary table of QSPM matrix 22 Table 2.1: Some economic indexes of our country .25 Table 2.2: Policies of domestic tea support 27 Table 2.3: Customer survey result of TWG 31 Table 2.4 Comparison of tea TWG with some competitors 32 Table 2.5: Summary of EFE matrix evaluation .34 Table 2.6: Human resources in TWG .36 Table 2.7: Characteristics of TWG tea products 38 Table 2.8: Market research activity of TWG 40 Table 2.9: Marketing activities of TWG 41 Table 2.10: Synthetize and evaluate IFE matrix 43 Table 3.2 : QSPM matrix for group combination of S-O 54 Table 3.3: QSPM matrix for group combination of S-T .57 Table 3.5: QSPM matrix for group combination of W-T .63 ii LIST OF FIGURES AND CHARTS Picture1.1: M Porter’s model of five competitive forces .13 Figure 3.1 Process of implementing the strategies for developing the chain of TWG tea stores till 2027 67 iii INTRODUCTION Urgency of the topic The fact that Vietnam signed the Trans-Pacific Partnership (TPP)– which willofficially come into effect in 2018 - has opened up many opportunities for enterprises to invest and develop their business Accordingly, as soon as the TPP comes into effect, the export and import tax rate among TPP member countries will be0% This facilitates the expansion and investment of foreign enterprises in Vietnam As one of the members of TPP, Japan is currently the country with the largest import-export volume to Vietnam The number of Japanese enterprises in Vietnam is increasing in quantity TWG Tea is one of the famous brands of Japan TWG Tea currently has 55 stores in 16 countries including Singapore, the United Kingdom, Japan, and the UAE In order to catch the opportunity from TPP, by the end of 2016, TWG officially opened a Salon and Boutiqueselling tea at B2 floor at Takashimaya, Ho Chi Minh City, Vietnam with more than 800 kinds of premium teas and exclusive processed teas Defining Vietnam as a fast growing and a potential market for premium tea consumption, TWG Tea intends to develop its TWG chain stores in Vietnam in the near future However, the later entrance to the market than other strong competitors from China, Thailand, Taiwan, etc and the habit of using domestic tea brands of Vietnamese consumers will be a great challenge for TWG Tea when it wants to develop business in Vietnam So, it can be seen that although TWG Tea’s products have more competitive advantages than other competitors in terms of quality and brandname, but with the difficulties and challenges mentioned above together with new business market, it is necessary to build business strategies when TWG wants to develop the TWG Tea chain stores in Vietnam in the coming time For those reasons, the author decided to select the topic "Strategies for business development of TWG chain stores in Vietnam" as a master thesis time In the next period, TWG should develop specialty tea areas and high quality tea to improve their control with the suppliers Table 3.4: QSPM matrix for group combination of W-O Alternative strategies Factors Weight Forward strategy Marketpenetration strategy AS TAS AS TAS 0.11 0.44 0.44 0.08 0.32 0.24 0.03 0.06 0.06 0.16 0.64 0.48 0.02 0.04 0.04 customers 0.10 0.20 0.20 Technology and environment of tea 0.06 0.24 0.24 External factors Vietnam's economy is growing, people's income is improved The foreign currency market and exchange rate seldom fluctuate Policies to support the development of tea production and business in the country: land policy, tax policy, unvestment policy, etc The foreign investment policies are ready, the political environment in the country is stable Natural conditions in Vietnam are suitable for developing high quality tea The tastes of young customers, highclass customers, international 60 Alternative strategies Factors Weight Forward strategy Marketpenetration strategy AS TAS AS TAS 0.09 0.18 0.18 0.05 0.20 0.15 0.10 0.30 0.30 0.03 0.06 0.03 are good for health 0.04 0.08 0.08 Few alternative products for tea 0.13 0.39 0.39 staff and bartenders 0.09 0.36 0.36 Source of managers 0.12 0.48 0.36 0.11 0.11 0.22 doing business in Vietnam 0.08 0.24 0.32 Ability to research the market and 0.08 0.08 0.16 production and processing in the world develop Competitors have many advantages Customers are satisfied with the quality of TWG tea The source of high quality raw materials, abundant goods In-capablility of negotiating prices with suppliers The appearance of many herbs that Internal factors The number and quality of service Competitiveness comparison with on same prices type in of products Financial capacity of TWG when 61 Alternative strategies Factors Weight Forward strategy Marketpenetration strategy AS TAS AS TAS understand customers’ tastes Ability to find partners and business locations 0.09 0.18 0.18 Quality of TWG Tea products 0.06 0.18 0.18 0.10 0.20 0.20 products 0.11 0.33 0.33 The flavor is in modern style 0.10 0.40 0.30 0.06 0.12 0.12 Distribution channel system and distribution forms The various, special and delicate flavor makes differences from other Promotion activities and discount programs Total Attractiveness Score 5.83 5.56 Source: Expert Consultation Forward strategy has higher total attractiveness score of 5.83 Marketpenetration strategy has lower total attractiveness score of 5.56 Therefore, between two strategic plans of W-T group, forward strategy will be selected to develop TWG tea chain in Vietnam To implement this strategy, TWG should focus on expanding distribution channels, promote activities of market research, ideal business locations to increase their control with retail stores, agencies and distribution system of TWG tea 62 Table 3.5: QSPM matrix for group combination of W-T Alternativestrategies Cost Factors Weight Focus leadership strategy strategy AS TAS AS TAS 0.11 0.33 0.44 0.08 0.32 0.32 0.03 0.06 0.06 0.16 0.64 0.64 0.02 0.02 0.04 0.10 0.20 0.20 0.06 0.18 0.18 External factors Vietnam's economy is growing, people's incomes are increasing The foreign currency market and exchange rate seldom fluctuate Policies to support the development of tea production and business in the country: land policy, tax policy, investment policy, etc The foreign investment policies are ready, the political environment in the country is stable Natural conditions in Vietnam are suitable for developing high quality tea The taste of young customers, highclass customers, international customers Technology and environment of tea production and processing in the world develop 63 Alternativestrategies Cost Factors Weight Focus leadership strategy strategy AS TAS AS TAS 0.09 0.18 0.18 0.05 0.15 0.15 0.10 0.30 0.30 0.03 0.06 0.06 are good for health 0.04 0.08 0.08 Few alternative products of tea 0.13 0.39 0.52 staff and bartenders 0.09 0.27 0.27 Source of managers 0.12 0.48 0.36 0.11 0.22 0.22 0.08 0.24 0.24 understand customers’ tastes 0.08 0.16 0.16 Ability to find partners and business 0.09 0.09 0.18 Competitors have many advantages Customers are satisfied with the quality of TWG tea The high quality source of raw materials, abundant goods Incapablility of negotiating prices with suppliers The appearance of many herbs that Internal factors The number and quality of service Competitiveness comparison with on prices same type in of products Financial capacity of TWG when doing business in Vietnam Ability to research the market and 64 Alternativestrategies Cost Factors Weight Focus leadership strategy strategy AS TAS AS TAS 0.06 0.18 0.24 0.10 0.20 0.20 products 0.11 0.33 0.33 The flavor is in modern style 0.10 0.40 0.40 0.06 0.06 0.06 locations Quality of TWG tea products Distribution channel system and distribution forms The various, special and delicate flavor makes differences from other Promotion activities and discount programs Total Attractiveness Score 5.54 5.83 Source: Expert Consultation Thus, between two strategic plans of W-T group, focus strategy will be selected to develop the chain of TWG tea stores in Vietnam in the next period Because Total Attractiveness Score of this strategy is 5.83 which is higher than Total Attractiveness Score of Cost leadership strategy (TAS = 5.54), to implement this strategy, TWG will promote the improvement of product quality to meet the highest needs of target customers, focus on taking care of the only customers who are the high-ranking customers to become the market leader, improve the competitiveness in segment of luxury customers Conclusion: After analyzing QSPM matrix for each strategy group developed in SWOT matrix, the author has selected theoptimum strategic 65 plans for developing the chain of TWG tea stores in Vietnam in the next period as follows: Strategy group of S-O : Differentiation strategy Strategy group of S-T : Backward strategy Strategy group of W-O : Forward strategy Strategy group of W-T : Focus strategy 3.2.3 Process of implementing the strategies The process of implementing development strategies for the chain of TWG tea stores in Vietnam in the period from 2018 to 2027 is as follows: Before implementing the selected strategies, TWG Vietnam will carry out feasibility study to find out the solutions, resources for developing operational plans and the ways to implement strategies effectively - this is the time to research the feasible strategies for developing the chain of TWG tea stores The period for implementing strategies is when TWG Vietnam concentrates resources to implement strategic solutions and proposed plans The time for strategy implementation is from the changes in the factor quantity to the end of the changes in quality of expected factors To test the changes in quality and quantity at each period, it is necessary to surveys on staff’s satisfaction with development strategies of the chain of TWG tea stores and the identification of customers with TWG tea brand 66 The process is detailed as follows: Strategies of developing TWG tea chain Process Differentiation Backward Forward strategy strategy Focus Survey on staff’s strategy strategy satisfaction Survey on the product identification of customers 2018 2019 2020 1 2021 2022 2023 2024 2025 2026 2027 Figure 3.1 Process of implementing the strategies for developing the chain of TWG tea stores till 2027 Remarks: Yellow cell is the time for feasibility study The numbering cell is the implementation time of the strategies The green cell is the time for the strategies in stable operation Red cell is the time to evaluate the effectiveness of strategies through the surveys on staff and customers 3.3 Solutions to implement the selected strategies 3.3.1 Additional services with TWG tea Because the quality of TWG tea products is highly appreacited in the market to make the differences, TWG should focus on the development of tea-serving service 67 This service can be developed at the salons to introduce and provide products of TWG or exhibitions that TWG participates in Nowadays, due to the influence of industry, many people especially the youth not know how to make tea and enjoy tea in the right style Although TWG tea is assessed excellent quality, if customers not know how to make tea, they will not feel the subtlety and speciality in the flavor Besides, customers not understand how to enjoy TWG tea although it is delicious, TWG tea is not reflected its value So, the increase in understanding of cosumers about TWG tea products such as how to make, how to enjoy is an effective way to develop the chain of TWG tea stores in Vietnam 3.3.2 Promote activities of marketing and market expansion To make differences and specialities in marketing activities, TWG Vietnam should carry out advertisements and marketing programs on "experiences on making and enjoying tea" - Develop information system, understand the latest information about economic and technical activities related to this sector in the country and foreign countries, carry out PR campaigns, seek information and needs of customers through exhibitions or festivals - Determine the economic growth of each market, if the market has high economic growth and people’s living is good, the needs will increase Therefore, TWG tea products will fill the gaps of these markets with TWG salons - Determine the proportion of market share Based on this, TWG evaluates which their asspects are inferior to other enterprises By the comparison with competitors, TWG Tea decides business policies in the future Regularly update information about competitors in the same industry - Market structure is classified by the consumption area and each consumer according to the product consumption channels Research on sectors and market components, the nature of market needs to determine the target 68 market After the market research, the advantages and difficulties will be analyzed and the long term measures will be taken to penetrate into that market - Develop effective and suitable advertising method: Advertisement must make the customer understand the value and essence of TWG tea For effective advertising, the contents must be really impressive that makes customers have more positive feeling of the products Therefore, when participating in exhibitions and fairs as well as advertising in other media, TWG must build an advertising program by sound and images, etc… Among them, it is necessary to explain more the characteristics of each product and their effect on using target 3.3.3 Improve the quality of human resources Human resource is the key factor in any activity A best strategy will fail without necessary people In the objectives of developing chain of TWG stores, the most important human resource is the bartender and service staff This is a direct team that brings income to TWG To ensure human resource to meet the requirements, TWG needs: - The recruitment and arrangement of managers, market research staff need to be strict with high requirements - TWG Vietnam also needs preferential policies to attract talented people experienced in the field of restaurants, hotels with proficiency in foreign language to work for TWG tea salons - Have policies to encourage the employees based on three main factors: the income is increasing, the income allocation must be fair and clear, the reward and discipline regime must be reasonable and the working invironment of employees must have neccessary facilities, a friendly relationship between staff and leaders for working together Sign labor contracts with social insurance, health insurance, etc… 69 - Regularly organize training courses for staff to update new knowledge for working - The process of checking and evaluating the works is clear - Pay attention to the spiritual and material lives of employees and their families 3.3.4 Establish marketing department, promote market research Due to the importance of market research for the development of TWG tea stores in Vietnam, in current and coming periods, TWG has to develop a specialized marketing department to carry out specific strategies on the market research After establishing Marketing Department, TWG needs to develop a complete system of market research - Determine the information sources to build a complete information collection system in the market such as: + Legal environment of countries, preferential policies of developed countries for developing countries, different psychology and habit of the consumers in different regions + Information about firms around the world, the concerns and business strategies in the coming years and other issues such as exchange rates, activities of the banks, etc + Good team of staff working in market research analysis Based on this, employees gather information, analyze and evaluate the needs for TWG tea products, tastes of each region 70 CONCLUSION Being a corporation in the sector of producing and trading all kinds of high-grade tea with excellent quality in the world, in adition to the successes when developing production and business in Vietnam market, TWG has many limitations such as: awkwardness in market access, marketing programs, distribution channel system Based on the theoretical background of business development strategies and the access to real situation of production and business of TWG tea products in Vietnam, meanwhile based on the investment incentive policies, economic situation in the country to help TWG expand its chain of stores, increase market share and assert the world's leading tea products in the mind of Vietnamese customers, the author has developed strategies for developing the chain of TWG tea stores in Vietnam market in the next period scientifically with specific contributions as follows: - Generalize and systematize the theoretical issues on strategies and business development strategies, including the study on process of developing strategies for business development of enterprise - Analyze the external business environment (macro environment, industry environment) and internal environment of TWG in Vietnam in the complete and exact way After that, collect and evaluate IFE and EFE matrices to offer opportunities, challenges, strengths and weaknesses for business development of TWG in Vietnam - Based on opportunities, challenges, strengths and weaknesses through IFE and EFE matrices, the author develops SWOT matrix as a basis for building strategic groups of SO, ST, WO, WT to develop TWG business chain in Vietnam market 71 - With the strategic plans developed through Swot matrix and the use of QSPM matrix, the author selects four best strategic plans to develop TWG tea chain in Vietnam market, including: differentiation strategy, forward strategy, backward strategy and focus strategy - Based on the selected strategic plans, the author proposes solutions and recommendations to implement the strategies in the next time in order to develop the chain of TWG stores in Vietnam market The research on thesis topic is the serious working process of the author However, due to its complexity, it will not avoid the shortcomings The author wishes to receive the comments of teachers, friends 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strategies for business development of TWG chain stores in Vietnam Usinginstruments and matrices to select the optimal strategies for TWG Tea Implementing the strategies to help TWG Tea chain stores increase... DEVELOP STRATEGIES FOR TWG CHAIN IN VIETNAM. 48 3.1 The objectives for business development of TWG in the next time 48 3.2 Analyze matrix and select strategies for developing chain of TWG stores. .. develop the TWG Tea chain stores in Vietnam in the coming time For those reasons, the author decided to select the topic "Strategies for business development of TWG chain stores in Vietnam" as