Poor management in prices and dumping at locklock vietnam co , ltd

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Le Ngoc Khanh Quang POOR MANAGEMENT IN PRICES AND DUMPING AT LOCK&LOCK VIETNAM CO., LTD MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City - 2019 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Le Ngoc Khanh Quang POOR MANAGEMENT IN PRICES AND DUMPING AT LOCK&LOCK VIETNAM CO., LTD MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: DR PHAM PHU QUOC Ho Chi Minh City – 2019 SUPERVISOR’S REPORT ON THE FINAL THESIS SUBMITTED FOR DEGREE OF MASTER of BUSINESS ADMINSTRATION The thesis proposal title: POOR MANAGEMENT IN PRICES AND DUMPING AT LOCK&LOCK VIETNAM CO., LTD Student Name: Le Ngoc Khanh Quang Supervisor: Dr Pham Phu Quoc General comments  Remarks on the student’s attitude:  Remarks on the assignment’s academic quality: Overall assessment: Meet requirement for submitting Not meet requirement for submitting Other remarks: - Did the student follow the report schedule? Yes No Other ……………………………… - The Turnitin plagiarism percentage: Supervisor’s signature TABLE OF CONTENT EXECUTIVE SUMARY PART I - INTRODUCTION Company background Business model Business goal Mission and Vision PART II - PROBLEM CONTEXT Symptoms: Growth rate of Lock&Lock supermarket channel in the period of 2017 2018 is very low Symptom validation 2.1 The development of supermarkets in Vietnam 2.2 Comparing with the total household appliances industry and the supermarket channel revenue growth rate of household appliances industry 2.3 Compare with other channels of Lock&Lock PART III - PROBLEM IDENTIFICATION Problem definition 1.1 Development trend of other channels 1.2 Goods are not guaranteed in quantity 1.3 Poor management in prices Problem validation PART IV – CAUSE VALIDATION AND CONSEQUENCES Causes and cause validation Consequences PART V – SOLUTION Alternative solutions 1.1 Cooperate with e-commerce websites 1.2 Work closely with B2B customers with contract that have a clear trading term 1.3 Focus more on brand positioning and marketing campaign to make customers realize the value of the product they receive 1.4 Build a team of professional sales staff that have good knowledge and skills with a thorough training program Action plans for the organization 2.1 Evaluate and select the optimal solution 2.2 Define the objectives 2.3 Action plans PART VI – APPENDIX Executive Summary For a long time, management has been seen as the key to the success of enterprises in the integration trend because management decides and coordinates the connection of business and production activities of enterprises to the market and between departments together, ensuring business operations always grow and develop Research and systematize the basic theoretical basis of management and the factors affecting the performance of Lock&Lock company, identifying the problem that the company is experiencing, thereby propose some solutions to improve the performance of Lock&Lock company in Vietnam, so that the company can achieve its common goal Lock&Lock Co., Ltd is having problems related to revenue at supermarket channel This problem is the poor management of prices and dumping outside the market applied with B2B channel goods B2B channel’s goods are only sold as gifts, however, these items are out of the market for trading purposes This problem caused the situation of decreasing sales of supermarket channels that did not meet expectations If there is no solution to this problem, in the long-term, this not only lost sales of supermarket channels, but also significantly affected the reputation and brand of Lock & Lock that the Shop channel and marketing department were invested to build in the past few decades in Vietnam The most feasible solution to this problem is building a team of professional sales staff that have good knowledge and skills with a thorough training program With this solution and a long-term plan, not only sales of supermarket channel will be improved, but also Lock&Lock can develop long-term stability and achieve its goals INTRODUCTION 1.1 Company background Lock&Lock Co., Ltd was established in July 2007, is a 100% foreign-owned company Lock&Lock Co., Ltd is a branch in Vietnam belonging to Lock & Lock Group Headquarters is located in Seoul – South Korea - Logo: - Address: 9th Floor, Dai Minh Convention Building, 77 Hoang Van Thai, Tan Phu Ward, District 7, Ho Chi Minh City, Vietnam Main business areas of the company: Wholesale and retail distribution of household appliance, food containers, kitchen tools, furniture, household appliance especially plastic used in the family with advanced technology transferred from Lock&Lock Group in Korea The company’s products are high-end household appliances available in 112 countries and Q-mark certified for product quality (Q-mark is a standard system of quality assurance of products, managed by KEMTI) Besides that, the company’s products are also voted the product of the year in the United Kingdom Lock&Lock owns 100 patents, designs and brands in 50 countries Especially, it is certified with the quality of products and brands of countries with strict requirements on product quality and production processes such as UK, US, Germany Currently, in Vietnam, Lock&Lock has production factories in operation In Dong Nai Province and Ba Ria Vung Tau Province 1.2 Business model 1.2.1 Key products Wholesale and retail distribution of Food Storage Containers, Kitchen Appliances and Livingware product lines with advanced technology transferred from Lock&Lock Group in Korea 1.2.2 Key customer All customers are interested in home appliances, especially housewives 1.2.3 Distribution Channels Lock & Lock have main distribution channels in Vietnam:  Supermarket and Convinience stores  Shop Brand  E-commerce  B2B 1.3 Business goal Annual revenue growth of 20-30% in all business channels in Vietnam and become the world’s leading company in household appliances industry in 2020 1.4 Vision And Mission 1.4.1 Vision Lock&Lock strives to become a world leader in household appliances, becoming a reputable brand and easily found in any country 1.4.2 Mission  Producing and trading in products of household plastic, household appliance, furniture and developing products with glass, ceramic and stainless steel materials  Improving the efficiency of production and business on the basis of product quality is the first task to create prestige for the company  Satisfying consumers’ needs, always improving and innovating modern advanced technologies, with the importers of products must ensure high competitiveness in price and quality PROBLEM CONTEXT 2.1 Symptoms: Growth rate of Lock&Lock supermarket channel in the period of 2017 - 2018 is very low Lock & Lock Co., Ltd has a total of main distribution channels: B2B, Supermarket, Shop and Online channnel Total revenue of Lock&Lock is generally very good and revenue growth rate in 2016, 2017 and 2018 is quite high, respectively 34%, 85%, 57% Year 2015 2016 2017 2018 Total Revenue 371,899,468 497,003,745 920,581,145 1,446,193,364 34% 85% 57% Growth rate Unit: 1,000 VND Table Lock&Lock Total revenue in 2015 – 2018 (Source: Sales Management Department) Unit: 1,000 VND Chart Lock&Lock Total revenue in 2015 – 2018 (Source: Sales Management Department) Lock&Lock’s supermarket channel accounted for the second largest sales of the company Therefore, this is a very important distribution channel in the company Chart Lock&Lock revenue rate of each channel in 2018 (Source: Sales Management Department) But at the end of 2018, the management of Lock&Lock realized that the sales of the Supermarket Channel at the company did not achieve the expected growth Growth rate in the period 2017 – 2018 is just 6% Year 2015 2016 2017 2018 Supermarket Channel 124,004,943 169,196,737 288,356,270 305,722,349 36% 70% 6% Growth rate Unit: 1,000 VND Table Lock&Lock Supermarket Channel revenue in 2015 – 2018 (Source: Sales Management Department) Symptoms are defined as sales of Lock&Lock supermarket channel is not high and growth rate in the period of 2017 - 2018 is very low 10 Interviewer: Do you think there is another reason or problem? Ms Nguyen Thi Bich Besides, I'm not in salesman position, so I don't know what Hong: other issues are or not Interviewer: Thank you for your helps Ms Nguyen Thi Bich You are welcome Hong: Transcript Interview with Ms Vu Ha My, Sales Supervisor of Supermarket channel, in charge of Coopmart and Coopmart Xtra  Date: March 5, 2019  Time: 10:50 A.M Location: Supermarket Channel, Sales Department, Lock&Lock office, 9th Floor, 77 Hoang Van Thai, Tan Phu ward, district 7, Ho Chi Minh City Interviewer: Hi Ms My, thank you very much for working with me in the interview today Ms Vu Ha My: Nine to meet you Interviewer: The purpose is we work together to find out what problems the company is facing so that we can come up with solutions to improve our company is better, you want that? Ms Vu Ha My: Of course, I am very pleased Interviewer: So let's start now Recently sales of supermarket channels did not reach the target as expected, I want to ask you if you have any difficulties in your current job, can you share me ? 44 Ms Vu Ha My: The goods I see are a problem that my team is facing, the company system does not allow to order products from the factory too much, for fear of not selling them all, I am very annoyed but not know how to Interviewer: According to you, the reason of not gainning the sales expectation is the shortage of good How you evaluate your Lock&Lock’s products compared to competing companies’products ? Ms Vu Ha My: First of all, the products of Lock & Lock brand focus on the psychological importance of consumers' health and safety Since then, the company in turn launched the “green” products, such as food preservation boxes, with the advantage of keeping fresh food long, preventing the escape of vitamins and nutrients, preventing smells effectively, not distributing toxic substances The constant change of products of Lock&Lock has turned all familiar everyday items such as bowl of chopsticks, warm cups, cooking pots, food containers, into living things with new shapes and bring interesting experiences and peace of mind to customers Interviewer: How about your Lock&Lock’s price? Ms Vu Ha My: Although good quality, diversified designs but compared to the ground of Vietnam household plastic market, the prices of Lock & Lock are quite high, because we have to import products from foreign countries, so we have to bear intermediate and import taxes password Although the selling price is reasonable but currently low-income consumers still have no conditions to use Lock & Lock products, so Lock & Lock has launched the F2C (Factory to Customer) sales model, 45 meaning the product will be sold directly from the factory to the user, with no intermediate costs, this model will expand to middle-income customers Interviewer: When having problems with goods like you share, how does your team solve? Ms Vu Ha My: In fact, although inventory management is not good, the number of goods is problematic, but when the program runs, there are still many solutions, such as borrowing other teams: shop, online, B2B, or propose to supermarket systems the similar items, therefore, sales can still be guaranteed even though it is difficult Interviewer: Thank you for your anwser Ms Vu Ha My: You are welcome Interview with Lock&Lock promotion girls at supermarkets Transcript Interview with Ms Hang Gia Linh, PG at Vinmart Cong Hoa  Date: March 12, 2019  Time: 8:00 A.M to 9:00 A.M  Location: Vinmart Cong Hoa, 17 Cong Hoa, ward 4, Tan Binh district, Ho Chi Minh City Interviewer: Hi Ms Linh, thank you very much for working with me in the interview today Ms Gia Linh: Nine to meet you Interviewer: The purpose is we work together to find out what problems the company is facing so that we can come up with solutions to improve our company is better, you want that? Ms Gia Linh: Of course, I am very pleased 46 Interviewer: So let's start now Recently sales of supermarket channels did not reach the target as expected, I want to ask you if you have any difficulties in your current job, can you share me ? Interviewer: In general, the Lock & Lock product is very good, I have no difficulties when selling goods, but recently, I have often been reflected by customers about the price Ms Gia Linh: How is it? Can you say more about this? Ms Gia Linh: Customers told me that the quality of household goods Lock & Lock is very good, the model is very beautiful and constantly has new products, but the price is too high Customers often complain about price issues They go online to find information and compare, there are many prices, when going to the supermarket to meet PGs of Lock & Lock, then they complain Interviewer: So how you solve that problem? Ms Gia Linh: In fact, I only sell at the price of the published product, the customer reflects it so I don't know how to deal with it because I don't know what’s going on in the market, as far as I know on the pages e-commerce, the products are very cheap but I don't know where the origin comes from so I can't advise customers to understand Interviewer: Thank you for your anwser Ms Gia Linh: You are welcome Transcript Interview with Ms Le Thi Duong, PG at MM Mega An Phu  Date: March 13, 2019  Time: 8:00 A.M  Location: MM Mega An Phu, An Phu, An Khanh, district 2, Ho Chi Minh City 47 Interviewer: Hi Ms Linh, thank you very much for working with me in the interview today Ms Le Thi Duong: Nine to meet you Interviewer: The purpose is we work together to find out what problems the company is facing so that we can come up with solutions to improve our company is better, you want that? Ms Le Thi Duong: Of course, I am very pleased Interviewer: So let's start now Recently sales of supermarket channels did not reach the target as expected, I want to ask you if you have any difficulties in your current job, can you share me ? Ms Le Thi Duong: In general, the Lock & Lock product is very good, I have no difficulties when selling goods, but recently, I have often been reflected by customers about the price Interviewer: How is it? Can you say more about this? Ms Le Thi Duong: Few days ago, Ms Yen (Go Vap District) was shopping at the supermarket and said that she recently bought a Lock & Lock induction electric cooker at MM Mega supermarket An Phu with a retail price of 1,800,000 VND, but when it came to Cho Lon Electronics Supermarket, the retail price of Lock & Lock induction electric cooker was only 1,200,000 VND She reflects more, there are many items of Lock & Lock, the price difference is up to millions VND There were MM Mega customers who didn’t buy Lock & Lock products but still reacted strongly to the PG, cursed a lot, talked a lot about the price, said Lock & Lock is scam, making us really very difficult to explain 48 Interviewer: So how you solve that problem? Ms Le Thi Duong: In fact, I only sell at the price of the published product, the customer reflects it so I don't know how to deal with it because I don't know what's going on in the market, as far as I know on the pages e-commerce, the products are very cheap but I don't know where the origin comes from so I can't advise customers to understand Interviewer: Thank you for your anwser Ms Le Thi Duong: You are welcome Interview with senior managers and director of Sales Department Transcript Interview with Mr Joo IL Gam, Sales Manager of Supermarket Channel  Date: March 14, 2019  Time: 3:00 P.M  Location: Sales Department, Lock&Lock office, 9th Floor, 77 Hoang Van Thai, Tan Phu ward, district 7, Ho Chi Minh City Interviewer: Hi Mr Joo, thank you very much for working with me in the interview today Mr Joo IL Gam: Nine to meet you Interviewer: The purpose is we work together to find out what problems the company is facing so that we can come up with solutions to improve our company is better Mr Joo IL Gam: Ok I see I am ready 49 Interviewer: So let's start now Recently sales of supermarket channels did not reach the target as expected, according to you think, the cause or problem causing the sales of supermarket channel is not as good as expected? Mr Joo IL Gam: My employees have complained about the complicated order process at the factory, which is the process of Lock&Lock company, however, we also have temporary solutions, and still provide enough goods for supermarket systems Interviewer: According to you, the reason of not gainning the sales expectation is the shortage of good How you evaluate your Lock&Lock’s products compared to competing companies’ products ? Mr Joo IL Gam: With a positioning strategy to become a premium brand in kitchenware manufacturing in Vietnam, Lock & Lock has opened 30 key stores, products of Lock & Lock are widely distributed on more than 546 shopping channels such as supermarkets, electronics stores, online shopping channels and B2B channels Lock&Lock brand focuses on high-end product segment In many international consumer goods exhibitions, customers have praised Lock & Lock products very well Interviewer: So Lock & Lock products is good, goods still provide enough, so what you think is the reason for the reduction in sales of supermarket channel? Mr Joo IL Gam: For the purpose of boosting the brand of Lock & Lock, Lock & Lock want to become a high-end household appliances brand in the eyes of all Vietnamese consumers, Lock&Lock promotes the development of Shop channel in all big shopping 50 mall in Vietnam Therefore, the development speed of supermarket channel cannot be equal to Shop channel Interviewer: Do you think there are any other reasons? Mr Joo IL Gam: “Digital economy” is an indispensable development, consistent with the new trend, bringing efficiency and high profit value while the traditional economy is gradually saturated, so that the revenue of supermarket channel may be reduced because of the online channel Interviewer: So in Mr Joo’s opinion, you have any solution to solve this situation? Mr Joo IL Gam: I think that B2B channel must be responsible for working closely with its customers, having contracts with strict and clear terms, binding customers to be responsible for Lock & Lock products purchased to make gifts, must not let goods slip out of the market for business purposes, like that, we can solve the root of the problem In addition, we need to cooperate with e-commerce sites, customers of online channels such as Lazada, Tiki, Shopee in order to limit the status of gift goods being released for business purposes Interviewer: Thank you for your anwser Mr Joo IL Gam: You are welcome Transcript Interview with Mr Kim Young Woong, Sales Director  Date: March 15, 2019  Time: 9:00 A.M  Location: Sales Department, Lock&Lock office, 9th Floor, 77 Hoang Van Thai, Tan Phu ward, district 7, Ho Chi Minh City 51 Interviewer: Hi Mr Kim, thank you very much for working with me in the interview today Mr Kim Young Nine to meet you Woong: Interviewer: The purpose is we work together to find out what problems the company is facing so that we can come up with solutions to improve our company is better Mr Kim Young Ok I see I am ready Woong: Interviewer: So let’s start now Recently sales of supermarket channels did not reach the target as expected, according to you think, the cause or problem causing the sales of supermarket channel is not as good as expected? Mr Kim Woong: Young The sales of supermarket channels in recent years have not grown as expected due to the strong development of online channels in the 4.0 era E-commerce is growing so fast, people are gradually rushing to buy goods online rather than strolling around stores and supermarkets Interviewer: Mr Kim Woong: Do you think there are any other reasons? Young Recently, we invested heavily in the shop channel to focus on brand positioning in the eyes of consumers, so in the period of 2017 - 2018, the sales of the supermarket channel did not meet the expectation partly because of the this cause Interviewer: I heard that employees reflect a lot about the order process and inventory data management, can you share more about this issue? Mr Kim Woong: Young In terms of goods, because the characteristics of the Household Appliance Industry are to constantly innovate and develop 52 products in a short time, we have planned to calculate and anticipate the market, however, it is not possible avoiding the risk of new items not being accepted by the market, moreover, the old items still have to maintain the sales, therefore, the company's policy is not to allow to order too much from the factory, if so, it must be divided into several batches of goods And about data errors in inventory management, it is normal, because the gap between actual data and system software is in the allowable range, all businesses will the stocktaking regularly to correct the data Interviewer: I heard PG staff at supermarkets said that customers compare prices very much, products outside the market are suffering from price disturbances, you know where the cause is? Mr Kim Woong: Young Normally, the company’s products are listed price uniformly between retail channels, Lock&Lock has a contract that requires distribution channels to officially sell at the retail price offered by the supplier and only get a discount by percent on retail price in a few promotions There are stores where they make their own promotions to clear stock or or they adjust prices themselves, we still accept this because this does not cause much retail price difference However, about Lock&Lock electric home aplliences in the market with the price difference is up to millions VND, I think this sources is from B2B channel or fake products, not genuine and no Lock&Lock genuine warranty Interviewer: Regarding the solution to this problem, Mr Joo has proposed a solution to solve the core problem with B2B customers by clear trading terms, you have any suggestions? 53 Mr Kim Young B2B channel has a small number of customers, however, big name customers in the market such as Samsung or Heineken, Woong: with great sales, standing in business position, we cannot force them with a contract binding on goods management terms They are likely to leave us to look for other suppliers, our sales will be significantly affected We have to be flexible in this, especially at this time B2B channel customers are extremely important As for the solution, I think there should be a marketing campaign aimed directly at the minds of customers, not letting them buy non-genuine goods in the market, besides, train PGs of supermarket channels to advise to promote additional revenue Thank you for your anwser Interviewer: Mr Kim Young You are welcome Woong: Transcript 10 Interview with Ms Nguyen Thi Huyen Trinh, B2B Channel Sales Manager  Date: March 8, 2019  Time: 3:00 P.M  Location: Sales Department, Lock&Lock office, 9th Floor, 77 Hoang Van Thai, Tan Phu ward, district 7, Ho Chi Minh City Interviewer: Hi Ms Trinh, thank you very much for working with me in the interview today Ms Trinh: Nine to meet you 54 Interviewer: The purpose is we work together to find out what problems the company is facing so that we can come up with solutions to improve our company is better Ms Trinh: Ok I see I am ready Interviewer: So let’s start now Recently sales of supermarket channels did not reach the target as expected, according to you think, the cause or problem causing the sales of supermarket channel is not as good as expected? Ms Trinh: In fact, I don't know much about the sales of supermarket channels, but I only know that in my sales team the revenue is the highest Interviewer: I heard Mr Kim say that the goods of the channel you might get out of the market for business purposes, what you think about this issue? Ms Trinh: The revenue of our big channel accounts for more than 50% of the company’s total revenue We supply large quantities to big customers like Samsung or Heineken with the purpose of making gifts However, on how goods of Lock&Lock of B2B channel go in the market with the purpose of trading, we cannot control Interviewer: Thank you for your anwser Ms Trinh: You are welcome 55 Interview with Lock&Lock’s distributor: MESA GROUP, one of enterprises authorized to distribute household appliances of Lock&Lock brand in Vietnam Transcript 11 Interview with Mr Nguyen Anh Tu, Sales Manager of MESA  Date: March 18, 2019  Time: 8:00 A.M  Location: MESA GROUP office, 202 Ly Chinh Thang, ward 9, district 3, Ho Chi Minh City Interviewer: Hi Mr Tu, thank you very much for working with me in the interview today Mr.Tu: Nine to meet you Interviewer: The purpose is we work together to find out what problems the Lock&Lock company is facing so that we can come up with solutions to improve Lock&Lock company is better Mr.Tu: Ok I see I am ready Interviewer: So let’s start now Recently sales of supermarket channels did not reach the target as expected, according to you think, the cause or problem causing the sales of supermarket channel is not as good as expected? Mr.Tu: As far as I know, my sales staff have been complaining about price issues by customers, I guess, the source of gift products that B2B channels of Lock & Lock have leaked out can be the main reason for the problem This, or it can also be fake goods, poor quality goods Interviewer: So what else causes you know? Actually, I only know what is going on in the market, and the problem of Lock & Lock company is not clear, but the Lock & 56 Lock product is very good so I think the problem is only the price Interviewer: So how you solve that problem? Mr.Tu: When buying products provided by MESA, consumers may incur a higher price but in return, they will enjoy genuine warranty and after sales service Besides, we also provide replacement parts provided by Lock & Lock All MESA products distributed have CO/CQ certificates However, in recent years, our revenue has hardly increased because the taste of Vietnamese consumers is finding cheap products, regardless of whether the quality is guaranteed or not Interviewer: Thank you for your anwser Mr.Tu: You are welcome 57 REFERENCES EVBN Vietnam's distribution and retail channels report CCI France Vietnam; 2018 Phuong N Analysis of retail market in Vietnam Thesis 2017 Philip K, Kevin K Marketing Management 14th Edition; 2012 p.401–431 Anderson, Eric T Effects of $9 Price Endings on Retail Sales: Evidence from Field Experiments Quantitative Marketing and Economics 2003; 1(1): 93–110 OpenStax How Changes in Income and Prices Affect Consumption Choices Principles of Economics; 2016 Gunasekaran A E-commerce and its impact on operations management Production Economics 2002 Mediapost E-commerce business: How to protect the brand? 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OF ECONOMICS HO CHI MINH CITY International School of Business Le Ngoc Khanh Quang POOR MANAGEMENT IN PRICES AND DUMPING AT LOCK&LOCK VIETNAM CO. , LTD MASTER OF BUSINESS ADMINISTRATION... very good and revenue growth rate in 201 6, 2017 and 2018 is quite high, respectively 34 %, 85 %, 57% Year 2015 2016 2017 2018 Total Revenue 37 1,8 9 9,4 68 49 7,0 0 3,7 45 92 0,5 8 1,1 45 1,4 4 6,1 9 3,3 64 34%... the factory, however, when using inventory managing software, comparing with the real stock, it is incorrect data Because of the inefficient inventory management, it is difficult planning for Supermarket