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IM PROVING THE COMPETITIVENESS 0F BLACK TEA PRODUCING ENTERPRISES IN THAI NGUYEN PROVINCE A Dissertation Presented to the Faculty of Graduate School of Southern Luzon State University, Philippines and Thai Nguyen University, S.R Vietnam In Partial Fulfillment of the Requirements for the Degree Doctor in Business Administration TRAN THI HUYEN (MARY) August 2013 THAI NGUYEN UNIVERSITY Socialist Republic of Vietnam SOUTHERN LUZON STATE UNIVERSITY Republic of the Philippines IMPROVING THE COMPETITIVENESS OF BLACK TEA PRODUCING ENTERPRISES IN THAI NGUYEN PROVINCE DISSERTATION Advisor Name of Student English Name Date of Birth Course : Dr NGUYỄN KHÁNH DOANH : TRẦN THỊ HUYỀN : Mary : 09/11/1979 : SLSU-DBA I Thai Nguyen, May 2013 Title IMPROVING COMPETITIVENESS OF BLACK TEA PRODUCING ENTERPRISES IN THAI NGUYEN PROVINCE A Thesis PRESENTED TO THE FACULTY OF THE GRADUATE SCHOOL SOUTHERN LUZON STATE UNIVERSITY IN COLLABORATION WITH THAI NGUYEN UNIVERSITY In Partial Fulfillment of the Requirement for the Degree of Doctor in Business Administration TRAN THI HUYEN- 2013 i ACKNOWLEDGMENT To complete the thesis, I have received the help of Thai Nguyen University, International Training Center-ITC, University of Southern Luzon - PHILIPPINES, Thai Nguyen College of Economics and Finance, the teachers, scientists, Provincial People's Committee of Thai Nguyen, Department of Agriculture and Rural Development of Phu Tho Province, Department of Agriculture and Rural Development of Tuyen Quang Province, Thai Nguyen Department of Technology, Department of Planning and Investment of Thai Nguyen, The small and medium tea enterprises in the provinces of Thai Nguyen, Phu Tho, Tuyen Quang and the help of instructors I would like to express my sincere thanks to the organizations and the individuals who helped me during this research In particular, I would like to sincerely thank Dr Nguyen Khanh Doanh has dedicatedly helped me to complete this thesis I am deeply and forever indebted to my family for their love, support and encouragement throughout my entire life I would like to thank my husband Duong The Cao, who has provided a tremendous amount of love and support during my research On the final note with love is for my children So much for objective and subjective reasons, the thesis has a lot of shortcomings; I look forward to receiving the construction ideas from scientists, teachers and colleagues Sincerely Thai Nguyen,…………………………… The thesis‟s author Mary ii ABSTRACT CHAPTER I: THE PROBLEM AND ITS SETTING Introduction Background of the study Statement of the problem Research Questions Objectives of the study The overall objectives Specific Objectives Hypotheses of the study Significance of the study Scope and limitations of the study Definition of terms CHAPTER II: REVIEW OF RELATED LITERATURE AND STUDIES 10 2.1 The conceptS of competition 10 2.2 The conceptS of competitiveness 12 2.3 System of criteria for assessing the competitiveness of enterprises 15 2.4 The basic contents when researching the competitiveness of enterprises 17 2.4.1 Competitiveness of products 17 2.4.2 The market share of the enterprise 17 2.4.3 Business performance 17 2.4.4 The productivity of production factors 17 2.4.5 The ability to link and cooperate of enterprises 18 2.4.6 The ability to attract the resources 18 2.5 The factors affecting the competitiveness of enterprises 18 iii 2.5.1 Economy 18 2.5.2 Interest rate on loans 18 2.5.3 Science and technology 18 2.5.4 The subplier 19 2.5.5 Threat of substitute products or services 19 2.5.6 Threat of new entrants 19 2.5.7 Level of organization and human resources 20 2.5.8 Financial capacity of enterprise 20 2.5.9 Marketing capacity of enterprise 20 2.6 Related literatures and studies 20 2.7 Conceptual framework 23 CHAPTER III: RESEARCH METHODOLOGY 25 3.1 Study area selection 25 3.2 Approach methods 25 3.3 Methods of data processing 27 3.4 Other methods 27 3.4.1 The descriptive statistical methods 27 3.4.2 Comparative method 27 3.4.3 Method of experts 28 3.4.4 Method of SWOT analysis 28 CHPATER IV: PRESENTATION ANALYSIS AND INTERPRETATION OF DATA 29 4.1 Status of competitiveness of black tea producing enterprises in Thai Nguyen province 29 4.1.1 Competitiveness of black tea products in Thai Nguyen‟s tea enterprises 29 4.1.2 The efficiency of production and business of black tea producing enterprises in Thai Nguyen 40 4.1.3 The productivity of the factors 42 iv 4.1.4 The capacity to attract financial resources of enterprises producing black tea in Thai Nguyen 45 4.1.5 Ability to cooperate and work of black tea businesses in Thai Nguyen 46 4.2 Factors affecting the competitiveness of black tea producing enterprises in Thai Nguyen province 46 4.2.1 Economy factors 46 4.2.2 Interest on loans 47 4.2.3 Political factors and legal 48 4.2.4 Elements of science and technology 48 4.2.5 The threat of substitute products and services 48 4.2.6 Industry competitors 49 4.2.7 The organizational level and management of human resources 50 4.2.8 Facilities and technology in the business of black tea in Thai Nguyen 52 4.2.9 Marketing Capacity 52 4.2.10 Financial resources 53 4.3 The strengths, weaknesses, opportunities and threats of black tea producing enterprises in Thai Nguyen 53 4.3.1 The strengths 53 4.3.2 The weaknesses 54 4.3.3 The opportunities 54 4.3.4 Threats 55 CHAPTER V: CONCLUSION AND THE PROPOSED SOLUTION 56 5.1 Conclusions 56 5.1.1 Through the study we draw the following conclusions 56 5.1.2 Capacity assessment and competitive factors affecting the competitiveness of v enterprises producing black tea in Thai Nguyen we found: 57 5.2 Some solutions to improve the competitiveness of balck tea producing enterprises in Thai Nguyen province 58 5.2.1 Viewpoints 58 5.2.2 Orientation 59 5.2.3 Some solutions to enhance competitiveness for enterprises producing black tea 59 5.2.4 Solutions for state policy 64 5.3 Recommendations 64 5.3.1 For State 64 5.3.2 For agencies, Thai Nguyen provincial government 64 5.3.3 For processing business, the business of black tea 65 BIBLIOGRAPHY 66 APPENDIX 69 APPENDIX 82 vi LIST OF TABLES Table 3.1: The number of sample divided by form of ownership 26 Table 3.2: The number of sample divided by capital scale 26 Table 4.1 Customers‟ reviews of black tea products‟ quality of in Thai Nguyen‟s tea enterprises 32 Table 4.2 Customer reviews on the form of black tea products‟ packaging 33 Table 4.3 Some product categories in the black tea producing enterprises 34 Table 4.4 Products‟ brand in black tea producing enterprises in Thai Nguyen 34 Table 4.5 Production costs and profits of black tea producing enterprises in Thai Nguyen according to the forms of ownership 35 Table 4.6 Production costs and profits of black tea producing enterprises in Thai Nguyen according to the capital scale 36 Table 4.7 The forms of advertising that black tea producing enterprises applied in 2012 38 Table 4.8 The forms of advertising that black tea producing enterprises applied 39 Table 4.9 The efficiency of production and business of black tea producing enterprises in Thai Nguyen according to the capital ownership 40 Table 4.10 The efficiency of production and business of black tea producing enterprises in Thai Nguyen according to the capital scale 41 Table 4.11 Margin / revenue of black tea producing enterprises in Thai Nguyen compared to black tea producing enterprises in Phu Tho and Tuyen Quang according to the forms of ownership in 2012 42 vii Table 4.12 The productivity of capital and assets of the black tea producing enterprises in Thai Nguyen 43 Table 4.13 Capital turnover ratio of black tea producing enterprises in some provinces and the forms of ownership 44 Table 4.14 Income affects consumption of black tea products in 2012 47 Table 4.15: Qualifications of Enterprise leaders in the production of black tea in Thai Nguyen 50 Table 4.16 Qualifications of workers in enterprise producing black tea in Thai Nguyen Province 51 viii APPENDIX ENTERPRISES SURVEY To improve the competitiveness of enterprises producing black tea in Thai Nguyen, would you please answer the questions below We are committed to the enterprise information that will not be disclosed to anyone Thanks for your cooperation Survey Number Province District Ward Business Name Address Name of the respondent Position A General characteristics of the facility A1 Type of business (production, processing and consumption): a State Enterprise b Corporation Company c Private Enterprise d Limited Liability Company A2 Enterprise was founded in public? A3 When the facility began processing? A4 Business has been granted or pending registration certification marks yet? Having been granted / registered - Attach the label for all products - Attach the label for each product Not be granted 69 A5 What businesses are producing? Products Yes No Products Black tea raw processing (drying) Black tea dissolved/can Black tea processing crude Black tea senior finished Black tea is high crude processing Other Yes No Black tea bag filter types Black tea packaging / box A6 From 2010 to 2012 had black tea base level of food safety following? Do not Number Black tea factory 2010 2012 know Black tea mass production practices of farmers in the region Black tea safety, manufacturing processes, facilities standards registered Black tea safety, manufacturing processes, standards of Vietnam Tea Association Black tea safety, manufacturing processes, customer standards The quality of black tea are other (please specify) A7 Basis of him, she had no certificate of making tea is not safe? Yes No If yes, please specify: type of certificate issuance, certificate authorities: A8 From 2010-2012, can you make tea safe? 70 B Tea production B1 Did business grow tea in 2012? Yes No B2 If yes, how much? B3 How much tea leaves harvested in 2012? Kg B4 What percentage of self-grown tea from fresh tea leaves are processed in 2012? % B5 What business is plant other crop? Yes No C Scale of production C1 How many establishments hire employees? C2 Labor skills Type of Total Unskilled Graduate labor University College Intermediate 2012 workers Indirect Labor Direct labor C3 Has your business ever have trouble with labor? Yes No C4 How is your business easily hire workers following these types? Type of Very labor difficult Difficult Normal Workers Technical Management Marketing Other 71 High Not Advantages applicable Advantages C5 How much fresh tea leaves processed in a day (kg) C6 How much tea leaf processing volume annually? (tons) C7 How many months your business work in a year? (months) D Procurement of raw materials D1 How much of fresh tea your business bought in 2012? (kg) D2 How much average price of fresh tea per kilogram? (VND/ kg) D3 The volume and variety of fresh tea purchased by the vendor Type Volume Number Type Price Supplier Volume (Kg) (kg) 2011 Farmers Cooperative Business Other Price 2012 (VND/kg) 2011 2012 (VND/kg) 2011 2012 D4 Who decided to purchase price? Seller Establishments Negotiation According to government price regulation D5 In 2012, the basis of the preliminary purchase tea processing the other? Yes No D6 (If yes) how much volume to buy? 72 2011 2012 Type Number Supplier Volume Price Volume Price (kg) (VND/kg) (kg) (VND/kg) 2011 Farmers Cooperative Farm Business Traders The processing Other Type 2012 2011 2012 2011 2012 2011 D7 Who is decide the price of black tea processing/processed? Seller Establishments Negotiation According to government price regulation E Production cost and product price How much does black tea production cost in the business? (1000VND/kg)? Number Price (1000VND) Items A Production cost Tea leaves Labor Packing Fuel Depreciation of fixed assets Overhaul costs Administration expenses Other expenses B Product Price 2011 73 2012 2012 G Consumption G1 How many businesses sold volume of dry tea Sales volume (kg) Number Average price (VND/kg) Categories 2011 Type Type Type Other 2012 2011 2012 G2 Percentage of sales to other customers? Rate % Number Buyers Traders Household processing Factory Retailers Company / exporters Other Total 2011 2012 100% 100% G3 Have Enterprises signed a contract with your customers? Yes No G4 If yes, the rate of sales contract? (%) 74 How is sold under contract rates for different customers? Rate % Number Buyers Traders Household processing Factory Retailers Company / exporters Other Total 2011 2012 100% 100% G5 What businesses have difficulties output of the product? Number Difficulties No customers Low demand Price volatile Shoddy No contract Other Yes No G6 From early 2011 until late 2012, how many businesses have successfully brought new products to the market, in areas that no one has done before? Do not empty 6-10 new products 1-2 new products 11-20 new products 3-5 new products More than 20 products 75 G7 Your business has shops or resellers tea products in the following areas? - Thai Nguyen - Hanoi - The other local - Not any where G8 How does the advertising business to sell products? Number Forms Do not Do little Professional Advertising with flyers Exhibitors Customer Conference By media Build Own Website introduction to business About the Tea Association Website Market Research Approaching potential customers Other activities G9 What are businesses have difficulty in marketing High shipping charges Unstable demand Other G10 Total revenue of the business? 2011 (VND / year) 2012 (VND / year) 76 G11 Total profit of the business? 2011 (VND) 2012 (VND) G12 In the future, What will predict trouble in the competitiveness of tea products in your business? G13 Can enterprises will overcome this obstacle? G14 What is needed to solve business exists to enhance the competitiveness of products in the development of black tea in the tea industry in your business? H Mobilization, processing equipment H1 How much the total amount of the processing equipment of the business today? .(1000 VND) H2 When enterprises have purchased these devices? H3 Price at time of purchase? H4 Which country has produced equipment? H5 Does Enterprise upgrade technical for these equipments? - Yes - No H6 If yes, what is the main reason to upgrade? - The backward - Scaling facility - High competition - Other (specify) H7 What is level of modern equipment compared to other processing firms? - Modern - Normal 77 - Backward - Do not know H8 How to it is to raise the kind of capital needed for your business? How much is the deposit amount? The types of Very Number Highly capital Working difficult Advantage applicable capital 100 million Working capital from 100-200 million Working capital 200 million Capital investment business under 100 million Production of capital investment business from 100 -400 million Capital investment Not Difficult Normal Advantages business over 400 million H9 Total assets? (VND) H10 Equity? (VND) 78 I Resources and information management I.1 Which is the main source of market information business? Friends, relatives Radio Government Client Televisions Report Factory Sponsors Other I.2 How to manage business in the following ways? Not Number The management Yes No applicable Are there daily reports every purchase, sell, spend? Are there records imported, ex of goods in warehouses? Are there diaries condition monitoring of machinery and equipment? Does Each outgoing shipment of cherry are encoded control information? Are there Tea on the floor material to the factory? Is it possible to know in advance the schedule of major tea vendors or not? Can you define debt, receivables from customers quickly? Are there daily reports of all activities of production, processing does not? Other activities 79 I.3 How is the relationship with your business partners, the following organizations? Number The partners / organizations The collection Unrelated Normal Very Verygood facilities, providing major tea Establishments, providing primary tea Establishments providing packaging Main customers in domestic Domestic Retail Customers Foreign customers Consulting organization in the country Organization of foreign consultants Vertical Authority Organization of transport 10 services 11 Other Partners K The difficulties and the proposal of business K1 What is difficulties encountered in the enterprise business process black tea products? Lack of raw materials for processing Equipment for processing of tea Lack of qualified manpower 80 Financial Difficulties Difficulties in marketing products The other difficulty K2 What are your suggestions enterprises with State and local policy incentives to support business development in corporate black tea? K3 Enterprise other aspirations? On month year 20 Inquisitor 81 APPENDIX VOTE FOR CUSTOMER SURVEY To find out the factors associated with black tea products and consumer preferences in order to improve the competitiveness of enterprises producing black tea in Thai Nguyen, please, answer me these questions below We are committed not disclose the information that he, (she) have provided Thank you for your cooperation Full name: Address: Phone Number Age Gender Sex: What is your daily drinks: a Black tea bag b Green tea tradition c Canned black tea d Freshwater e Coffee f The other drinks What type of Black tea that you like the most? Why? What made you interested in when you drink tea: a The quality of tea products b Packaging products c Product Brand When you usually drink tea of the day? a Morning b Noon c Afternoon d Evening e Another time 82 Please check the appropriate box Type of tea Very Pretty Medium Poor Black tea special Black tea 1st Black tea 2st Black tea 3st 10 Please tick the appropriate box Black tea products tea Beautiful Pretty nice Medium Bad enterprises in the provinces Thai nguyen Phu Tho Tuyen Quang 11 Please tick the appropriate box? Products used tea The average income / Canned Black tea Herbal black Other black tea bag tea Tea month Less than million 1-2 million 3-5 million Greater than million Inquisitor 83 ... PROVINCE DISSERTATION Advisor Name of Student English Name Date of Birth Course : Dr NGUYỄN KHÁNH DOANH : TRẦN THỊ HUYỀN : Mary : 09/11/1979 : SLSU-DBA I Thai Nguyen, May 2013 Title IMPROVING COMPETITIVENESS... who helped me during this research In particular, I would like to sincerely thank Dr Nguyen Khanh Doanh has dedicatedly helped me to complete this thesis I am deeply and forever indebted to my family... support and encouragement throughout my entire life I would like to thank my husband Duong The Cao, who has provided a tremendous amount of love and support during my research On the final note