VINAMILK I Brief introduction Vinamilk is the leading company in producing dairy products in Vietnam The company has its headquartered located at 10 Tan Trao, Tan Phu ward, District 7, Ho Chi Minh City The company consists of one headquarter, one office, 24 affiliated units and a total of 5,400 official employees In 1976 when Vietnam Dairy Products Joint Stock Company (Vinamilk) was newly created, they acquired the name “The North-region coffee and milk company” with three factories named Thong Nhat, Truong Tho and Dielac The company officially adopted the name Vietnam Dairy Products Company (Vinamilk) and expanded their business into the middle region of Vietnam by undertaking joint ventures with Quy Nhon Frozen Seafoods Joint Stock Company Vinamilk is the market leader in Vietnam’s dairy industry, accounting for 54.4% the market for sterilized milk; 40.6% for powdered milk; 33.9% for drinking yoghurt; 84.5% for yoghurt and 79.7% for condensed milk The company mainly works in industry for manufacturing and selling bottled milk, powdered milk, nutrition powder and other dairy-based products II Organizational structure Vinamilk was the first company in Vietnam pioneering in applying advanced management model (no Inspection Committee) As such, Audit Committee under the BOD is primarily responsible for ensuring the efficiency of internal control and risk management systems This model was put on effect from 15th April 2017 onwards 1 Lines of authority: Vinamilk has a clear hierarchical order comprising four main lines of top managers: a board of directors with four consulting committees; a chief executive officer; internal control & risk management director and internal audit director; and 11 specialized directors • Advantages: - A decent hierarchy of organizational positions, enabling higher-level managers to effectively hand out missions and supervise the subordinates under their direct control - Directors have a clear path of responsibilities, each accounting for a certain specialization, thereby could carry out their goals without confusion • Disadvantage: - Directors are simultaneously accountable to both higher-level managers and lower-level subordinates This is closely associated with an accumulating pile of work, leading to the risk of declining work performance Departmentalization Vinamilk utilizes a functional organizational structure, consisting of departments in regard of strategic planning; IT; international sales; domestic sales; marketing; research and development; production; dairy development; supply chain; human resources, administrative & public relation; and finance • Advantages: - Because each department is working towards a specific major, they can bring out the best of their expert capabilities, paving the way for more fruitful outcome - Simplifying the task of training employees As different departments carry out different missions, the training process can be done within the internal extent of departments - Easing the directors’ job of supervising as the departments’ responsibility is clear, clearing out chaos in the course of information-analyzing • Disadvantage: - There is not much room for cross-functional cooperation, the underlying reason for the company’s fragmented labor resource - The high degree of departmentalization inhibits the directors’ expertise development in fields where they are not in charge of They can only execute work to the limit of their technical knowledge, which directly results in weak coordination with other departments Degree of specialization As mentioned above, Vinamilk has 11 specialized departments • Advantages: - Owing to the high degree of specialization, complex tasks are divided into smaller pieces to be explicitly executed in different regards Those regards fall into the categorical missions of separate departments, which means that they are dependent from one another and can be implemented with flexibility - Specialization is inherent with an increase in specialized technical tasks, which would enhance working efficiency - The flexibility to place employees in department which is suitable for their preference and set of skills • Disadvantage: - The concentration on functional tasks could produce boredom towards work, while decreasing the levels of creativity and motivation - Restraining cross-functional teamwork - Limiting the ability to resolve multidimensional problems that requires collateral knowledge - Inhibiting the external flow of information Degree of decentralization • Advantages: - Ensuring consistency in the set of procedures and rules across functional departments - Managers can allocate work to subordinates with ease - Individuals who are highly ranked have more promotion opportunities • Disadvantage: - Diminishing lower-level employees’ importance, motivation and creativity - That the board of directors have too many responsibilities can reduce their available time for the strategic management of the company - Taking more time to reach the consent for a decision Span of control • Advantages: - Top managers are in charge of many lower-levels employees, hence thorough supervision is made possible as they will receive reports about the working performances from different departments Based on which, decisions will be made on whether there should be any changes or corrections in order to uphold the decency of the business • Disadvantage: - The process of supervising may become chaotic owing to the large number of employees that directors are responsible for - People who hold responsibilities to both higher managers and lower subordinates are under pressure of finishing the work with fruitful outcomes, as the workload is huge Types of coordination Vinamilk’s employees mainly coordinate within the extent of a department Higher-level managers have more chances to take part in cross-functional cooperation • Advantages: - Strengthening the bonds in separate departments - Applying the best possible expertise • Disadvantage: - Limiting cross-functional cooperation - Resulting in a fragmented workforce Recommendations - Enabling more cross-functional coordination where employees of different departments work together on the same projects By doing this, not only will Vinamilk bring employees closer together, but also enhance the flow of external information - Building expertise-training sessions for employees, so that they would gain more collateral techniques and apply them to complex matters - Simplifying the process of information-reporting to eliminate chaos and foster efficiency - Granting lower-level employees more control to voice their opinions and contribute to the company III Motivation theory Vinamilk widely implements the ERG Theory of Clayton Alderfer – which comprises existence, relatedness and growth needs Vinamilk has offered a diverse array of opportunities in terms of welfare, interpersonal relationships and personal enhancement to help employees surpass any obstacles and surge in their job To illustrate, I will elaborately shed light on Vinamilk’s motivation theory and practice with specific proofs and statistics Existence needs Vinamilk’s rate of salary and the inherent benefits are considered as the most attractive in the Vietnam’s labor market, thus attracting many highly-skilled labors Workers at Vinamilk not solely receive the monthly payment for their working hours, but also an offer for the maintenance of welfare, health and life standard • Healthcare: Vinamilk’s employees get to enjoy a free package of 24/24 health and accident insurance The company also covers fees of insurance for higher-level managers’ family members Besides, there is a regular scheme of health-check for employees working under Vinamilk This is arranged once a year for male, twice a year for female, and during which flu vaccination is at their disposal • Work-life balance: Vinamilk frequently arranges communal art and sport gathering, get-away trips, annual leaves, or birthday and wedding presents The company also supports workers’ offspring by providing them with presents on special occasions for children and organizing events to recognize students with distinguished achievements • Subsidy and reward: Ordinary working employees are benefited from free daily meals and a chance to purchase Vinamilk’s common stock at a discounted price Those obtaining outstanding contribution will be rewarded with bonuses and Employee Stock Ownership Plan (ESOP) • Priorized benefits for female workers: Women working at Vinamilk will be honored on occasions like 8/3 and 20/10 Vinamilk also offers support for kindergarten and pregnancy fees Relatedness needs At Vinamilk, every individual belongs to a larger part of the complex and the company always attempts to count everybody in the integration Workers’ inquiries are heard, respected and resolved to perfect the function of the workplace That is why Vinamilk’s figures for workers taking leaves dramatically declined to only 6.63% in 2019, compared to the average number of 15-20% at other companies Those who are newcomers to Vinamilk will join an integrated training program to gradually accustom themselves to the new working environment, come to terms with the company’s procedure and bear in mind their responsibilities The Union of Labor is also existent to protect the rights of workers and make sure the preset goals are well accomplished Growth needs Right from 1993, Vinamilk has signed a long-term contract with Moscow Applied Knowledge of Biotechnology to train a large number of employees in the company In recent times, in the period from 2017 to 2019, a total of 100 employees have signed up for educational courses carried out by Vinamilk, and 30% of which has proceeded forward to hold higherlevel managerial positions Besides, the company has always made a point of recruiting intellectuals from different walks of life to bring about diversity to the company The recruiting progress is done regardless of age, region or religion That has also shown that at Vinamilk, everybody is well respected and either discrimination or harness is welcomed Pros Firstly, the utilization of the ERG Theory is inherent with a stable working efficiency and thus maintaining the company’s productivity Owing to the ERG theory, Vinamilk gets to satisfy employees’ diverse needs of fringe benefits, not only in terms of living standard but also workplace safety and the same matters revolving around the employees’ family members The existence of such incentives will surely boost the workers’ enthusiasm for work and further engage them with the company, hence bearing merits to not only the short-term profitability but also the long-term sustainable development Additionally, workers at Vinamilk are free to pursue their personal pattern of desires That is because the ERG platform allows fellow counterparts to customize desires and orderly exercise their preferential needs Variables such as education, family background, and cultural environment can alter the importance or driving force that a group of needs hold for a particular individual Besides, the ERG theory states that it is possible to attain a number of goals at one time, making it easy for people to allocate their resources to the process of goal-acquirement Cons The theory does not offer clear cut guidelines The ERG model implies that individuals will be motivated to engage in a behavior which will satisfy one of the three sets of needs postulated by the theory This might create the inconsistency towards the achievement of the company’s goal Also, since Vinamilk presents their employees with a wide array of available fringe benefits, alternative adverse impacts on the company’s productivity might arise The abundance of resources is likely to turn off ill-mannered individuals’ thirst for working, owing to the mindset that hard work is unrequired as eventually benefits would be offered Solutions Vinamilk is recommended to constantly supplies employees with an array of needs and room for improvement so as to prevent scenarios where employees are stuck with their unwanted or accomplished needs, thus displaying ineffective working manners This could be made possible by handing out surveys to examine employees’ opinions, hence accordingly adapt In the meantime, to deal with employees who are not working up to their full capacity, there should be managers who are in charge of steering out for employees’ course of development and working progress Those who refuse to comply with the company’s procedures should be heavily punished by means of cutting down the current rate of salaries or fringe benefits IV Marketing plan for Vinamilk in the year 2019 and 2020 Goal - Vinamilk aims to increase their market share by 20% in the next two years Objectives - Making Vinamilk the most reliable and trusted brand on nutrition products by applying scientifically-proven methods to the manufacturing process - Developing comprehensive portfolio of dairy products, targeting the extensive segments of customers and forfeiting the production of best-selling goods - Strengthening their distribution channels and network coverage to expand their business to regions where Vinamilk’s market is not widespread, especially in remote areas and small towns Analysis • Market analysis: The market for dairy products experienced a gloomy outlook in the period from 2017 to 2018 In specific, since the fourth quarter of 2017, the dairy market only recorded negative growth statistics However, it should not be considered a detrimental effect as the declining duration is expected to be a short-term period Also, Vietnam’s figures for the consumption of dairy products are relatively low compared to our population, and corporations can take advantage of this to exploit the potential customers • Opponent analysis: TH True Milk - TH True Milk’s origin was generated by the desire to develop Vietnam into a strong nation within which everybody, especially children, can enjoy high-quality dairy products The company widely utilizes the ESL technology – a modern method imported from Germany to fully remove bacteria from the milk The products are sustained in a special package consisting of six layers to preserve the quality and maintain the goodness - Strengths: TH True Milk possesses the biggest milk-producing factory in Asia, capable of producing 5000 tones of milk per year TH True Milk also owns a widespread coverage of distributing networks locating all across the country with diverse and highly-qualified lines of products - Weaknesses: TH True Milk’s price point is higher than that of other milk companies in the same industry SWOT analysis (optional) Strength (S) Weakness (W) S1: Vinamilk is ranked as the top company in the dairy market, accounting for the major production and market of dairy products (55% in 2018) W1: Vinamilk is greatly dependent upon imported resources, hence the input costs are highly affected by the worldwide dairy price point and the exchange rate S2: The board of directors possess outstanding managerial skills (Vinamilk is great at stabilizing their input cost and maintaining the stable annual profits) Marketing, research and developing teams are experienced and familiar with the market W2: A large amount of budget is allocated to advertising, research and developing, as well as the cost of supporting sales agencies S3: The range of products is diverse and highly qualified S4: Wide network of distribution throughout 64 cities and provinces with 250 official distributors and over 135.000 points of sale, incorporating both traditional and modern methods of sales S5: Cutting-edge manufacturing line, ranked among the top in Asia Vinamilk’s farms are certified by the Global Gap qualification Opportunity (O) Threat (T) O1: Vietnam economy is witnessing rapid development with a population of over 94 million in 2018, 25% of which are children under 25 Urban areas are being expanded As a result, the demands more dairy products in the domestic market are upscaling T1: Vietnam is located in the region of humid tropical climate with an average temperature of over 21 degrees Celsius, which directly and indirectly influence to cows’ milk-producing capability At the same time, the heat creates trouble for the process of ingredient preservation O2: Vietnam economy is deeply integrating T2: Vinamilk has financially-strong, with that of the world, hence creating opportunities for Vietnamese business to join in the chain of global commerce, in which the dairy market is a prominent sector prestigious and highly-renowned dairy companies as opponents (Dutch Lady, TH True Milk…) T3: Vinamilk’s domestic opponents have huge opportunities to integrate into the dairy market With a lower tax on imported goods and the openness created by globalization, international dairy corporations present to be another source of another threat O3: The government has authorized promising incentives for the dairy market (allocating 2,000 billion VND for dairyrelated programs to the year 2020): +, Maintaining a lower import tax than that of WTO, a chance to reduce manufacturing budgets T4: Modern customers set incredibly high +, The Ministry of Industry and Trade has standards for products’ packaging and approved numerous encouragements for quality corporations majoring in dairy products in order to foster Vietnam’s dairy market O4: Vietnam’s dairy market receives assistance from Malaysia, the Netherlands, Australia… in terms of raising cattle and supervising the milk quality Corporations can take advantage of this to learn and replicate the manufacturing procedures in accordance with the international standardization *4P marketing strategies: - Product: Vinamilk’s products are rich in nutrients and vitamins, ingredients that are crucial to the physical development of human beings Vinamilk always moves ahead a sustainable development that incorporates scientifically-proven technology into the course of productmanufacturing The company also carries out thorough research on Vietnamese’ specific needs for health maintenance, so as to fully satisfy the domestic market That is why Vinamilk has expanded a branch to develop VFresh – a line of healthy beverages - Price: Vinamilk always maintains a reasonable price point although all input resources are imported from foreign countries The corporation also organized period of discounts on special occasions - Place: Vinamilk has covered 125,000 points of sale all over Vietnam They mainly distribute products through two primary sources: sales agency and supermarkets Besides, Vinamilk seeks exporting opportunities to integrate in markets in the same region and in the world - Promotion: Vinamilk organizes intensive advertising campaigns on the platform of television broadcast, magazines, social networks and offline posters Additionally, there are frequent discounted promotions and free trial counters at public places like supermarkets or schools Lastly, Vinamilk attempts to polish their brand image by taking part in welfarerelated campaigns to support the lives of the unprivileged and offer them various developing opportunities 5 Alternative courses of actions Option Responsible Timeline departments Option - Marketing 2019 -2020 department Research and development department Option - Marketing 2019 -2020 department Research and development department Option - Marketing 2019 -2020 department Research and development department Budget Expected outcome billion - Reaching out to various VND segments of customers Receiving numerous feedbacks to improve the products’ quality - Improving the brand’s image towards the public eye billion - Approaching both domestic VND and international customers - Familiarizing Vinamilk’s image with foreign users - Increasing sales (owing to the increasing demand for recreational activities) Unexpected ou - Costly to imple - The process track of the sp number of go receive feedb time-consuming labor-intensive - Unstable resu any tourist is w try a br beverage - Yielding sh effect, highly de upon the reason 500 million Approaching different - Additional c VND market segments with ease employees who Increasing customers’ charge of the f likelihood of purchasing the counters products (if they are pleased with the countered trials and the enclosed gifts) - Easy to implement - Option 1: Approaching by developing associations with schools, hospitals, gym rooms… and sponsoring free healthy beverages - Option 2: Partnering with service and travelling agencies (airlines, theme parks, resorts…) and selling/giving away healthy beverages - Option 3: Cooperating with supermarkets/sales agencies and setting up Vinamilk-labeled counter where customers can try out the healthy beverages The new line of products would be sold at a discounted price or gifted with other products during the trial period Evaluation => A simultaneous combination of option and would be most effective for Vinamilk’ marketing campaign While option directly aims to approach the targeted market segment, option is to arouse the mass public’s attention Specific timeline Period 2019 summer Time 1/6/2019 – 31/8/2019 Program Budget Arranging the “Energetic Summer 200 million VND The new 1/9/2019 – 30/11/2019 schoolyear Western and 1/12/2019 – 28/2/2020 Lunar New Year World Health 1/3/2019 – 31/5/2020 Day with Vinamilk” music festival Sponsoring the nationwide football contest for kids Advertising on television and online platforms (Facebook, YouTube, websites) Granting educational scholarships 500 million VND for underprivileged students in Ha Noi Arranging a photograph contest with the theme “Coming back to school” Setting up full-moon celebrations for kids Advertising on television and online platforms (Facebook, YouTube, websites) Arranging gifting sessions for loyal 300 million VND customers Sales promotions named “Tet with Vinamilk – Tet with happiness” Advertising on television, online platforms (Facebook, YouTube, websites) and hanging banners at supermarkets Sales promotion named “World 500 million VND Health Day – Staying healthy with Vinamilk” Building an online healthconsulting application Sponsoring big hospitals and gym branches in Ha Noi and Ho Chi Minh city Advertising on television, online platforms (Facebook, YouTube, websites) and hanging banners at public places and buses