Improving the competitiveness of black tea producing enterprises in thai nguyen province

IMPROVING THE COMPETITIVENESS OF BLACK TEA PRODUCING ENTERPRISES IN THAI NGUYEN PROVINCE _ A DISSERTATION Presented to the Faculty of the Graduate School Southern Luzon State University, Lucban, Quezon, Philippines in Collaboration with Thai Nguyen University, Socialist Republic of Vietnam _ In Partial Fulfillment of the Requirements for the Degree Doctor of Business Administration _ By TRAN THI HUYEN (MARY) December 2013 i APPROVAL SHEET The Dissertation of TRAN THI HUYEN entitled IMPROVING THE COMPETITIVENESS OF BLACK TEA PRODUCING ENTERPRISES IN THAI NGUYEN PROVINCE submitted in Partial Fulfilment of the Requirements for the Degree DOCTOR OF BUSINESS ADMINISTRATION A program offered by Southern Luzon State University, Republic of the Philippines in collaboration with Thai Nguyen University, Socialist Republic of Vietnam has been approved by Oral Examination Committee WALBERTO A MACARAAN, EdD Expert EDWIN P BERNAL, DBA Expert JOANNA PAULA A ELLAGA, DBA Expert ALICE T VALERIO, PhD External Panel CECILIA N GASCON, PhD Chairman Endorsed by: Recommended by: NGUYEN KHANH DOAN, PhD Adviser APOLONIA A ESPINOSA, PhD Dean Accepted in Partial Fulfilment of the Requirements for the Degree Doctor of Business Administration _ Date WALBERTO A MACARAAN, EdD Vice President for Academic Affairs ii CERTIFICATE OF ORIGINALITY iii ACKNOWLEDGMENT The researcher would like to express her heartfelt gratitude to the following: Leaders of Thai Nguyen University in VietNam and Southern Luzon State University in the Philippines, who created best conditions for her to complete the course in general and finish the thesis in particular; Dr Cecilia N Gascon, Dr.Melchor Melo, Dr.Alice T.Valerio, Dr Professor Do Anh Tai, and Dr Tran Dai Nghia, for providing her with a rich and fertile environment to study and explore new ideas; Dr Nguyen Khanh Doanh, who provided her valuable guides to complete the dissertation; Dr Dang Kim Vui, the Persident of Thai Nguyen University, who cooperated with with Southern Luzon State University, Republic of the Philippines in offering Doctor of Business Administration through the ITCTUAF; Dr Tran Thanh Van, the Dean of the Graduate School of Thai Nguyen University, for his assistance and encouragement to pursue this study; Professor Tran Tuan Anh and Professor Nguyen Thanh Hai, who managed the International Cooperation Program between Vietnam and the Philippines; iv Thai Nguyen College of Economics and Finance, 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, small and medium tea enterprises in the provinces of Thai Nguyen, Phu Tho, Tuyen Quang, who helped her to complete the dissertation; and My family, my husband Duong The Cao, and my children, for their love, support and encouragement throughout my entire life Tran Thi Huyen – Mary v DEDICATION This academic pursuit is dedicated to my family, my husband Duong The Cao, and my children Tran Thi Huyen – Mary vi TABLE OF CONTENTS PAGE TITLE PAGE ……………………………………………………………… i APPROVAL SHEET ……………………………………………………… ii CERTIFICATE OF ORIGINALITY ……………………………………… iii ACKNOWLEDGMENT ………………………………………………… iv DEDICATION ……………………………………………………………… vi TABLE OF CONTENTS ………………………………………………… vii LIST OF TABLES ………………………………………………………… ix LIST OF FIGURES ……………………………………………………… xii LIST OF APPENDICES ………………………………………………… xiii ABSTRACT ………………………………………………………………… xiv CHAPTER I II III INTRODUCTION …………………………………………… Background of the Study ………………………………… Statement of the Problem ………………………………… Hypothesis of the Study …………………………………… Significance of the Study ………………………………… Scope and Limitations of the Study ……………………… Definition of Terms ………………………………………… REVIEW OF LITERATURE ……………………………… 10 Conceptual Framework ………………………………….… 30 METHODOLOGY Locale of the Study ………………………………………… vii 32 Research Design …………………………………………… 33 Data Gathering Procedure ………………………………… 33 Respondents of the Study ……………………………… 34 Research Instrument ………………… … …….…… 34 Methods of Analysis ….……………… … …….…… 35 IV RESULTS AND DISCUSSIONS ………………………… 37 V SUMMARY, CONCLUSIONS AND RECOMMENDATIONS …………………………………… 71 Summary ……………….…………………………………… 71 Conclusions ………………………………………………… 72 Recommendations ………………………………………… 75 REFERENCES …………………………………………………………… 76 APPENDICES …………………………………………………………… 79 CURRICULUM VITAE …………………………………………………… 92 viii LIST OF TABLES TABLE 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 PAGE The Efficiency of Production and Business of Black Tea Producing Enterprises in Thai Nguyen According to the Capital Ownership …………………………………………… 38 Efficiency of Production and Business of Black Tea Producing Enterprises in Thai Nguyen According to the Capital Scale ………………………………………………… 39 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 ………………………………… 40 Customers’ Reviews of Black Tea Products’ Quality of Thai Nguyen’s Tea Enterprises …………………………………… 42 Customer Reviews on the Form of Black Tea Products’ Packaging ……………………………………………………… 46 Some Product Categories in the Black Tea Producing Enterprises …………………………………………………… 46 Products’ Brand of Black Tea Producing Enterprises in Thai Nguyen …………………………………………………… 47 Production Costs and Profits of Black Tea Producing Enterprises in Thai Nguyen According to the Forms of Ownership ……………………………………………………… 48 Production Costs and Profits of Black Tea Producing Enterprises in Thai Nguyen According to Capital Scale … 49 Forms of Advertising That Black Tea Producing Enterprises Applied in 2012 ………………………………… 53 Forms of Advertising That Black Tea Producing ix TABLE 4.12 4.13 4.14 4.15 4.16 PAGE Enterprises Applied …………………………………………… 54 Productivity of Capital and Assets of the Black Tea Producing Enterprises in Thai Nguyen ……………………… 58 Capital Turnover Ratio of Black Tea Producing Enterprises in Some Provinces and the Forms of Ownership ………… 59 Income Affects Consumption of Black Tea Products In 2012 …………………………………………………………… 62 Qualifications of Enterprise Leaders in the Production of Black Tea in Thai Nguyen …………………………………… 66 Qualifications of Workers in Enterprise Producing Black Tea in Thai Nguyen Province ……………………………… 67 x 78 Vu Trong Lam (2006), Enhance business of enterprises in progress of international economic integration Website: http/www.chethai.com.vn Build brand for Thai Nguyen’s tea Website: www.nc.seif.gov.vn Website: http/www.vietnamnet.vn Website: http/www.vietnamnet.vn/xuctiendautu 79 APPENDICES 80 Appendix A 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 granted A5 What businesses are being produced? 81 Products Black tea raw processing (drying) Yes No Products Yes No Black tea dissolved/can Black tea processing crude Black tea senior finished Black tea is high crude processing Other Black tea bag filter types Black tea packaging / box A6 From 2010 to 2012 , did black tea followed basic level of food safety? Number Black Tea Factory 2010 2012 Do not 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 She had no certificate that 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? B Tea production B1 Did business grow tea in 2012? Yes No B2 If yes, how much? B3 How much tea leaves are harvested in 2012? Kg B4 What percentage of self-grown tea from fresh tea leaves are processed in 2012? % 82 B5 What field is planted with other crop? Yes No C Scale of production C1 How many establishments hire employees? C2 Labor skills Type of labor Indirect Labor Direct labor Total 2012 Graduate University College Intermediate Unskilled workers C3 Has your business ever have trouble with labor? Yes No C4 How did your business hire these types of workers? Type of labor Very High Not Difficult Normal Advantages difficult Advantages applicable Workers Technical Management Marketing Other C5 How much fresh tea leaves are processed in a day (kg) C6 How much tea leaf are processed annually? (tons) C7 How many months your business prosper in a year? .(months) D Procurement of raw materials D1 How much of fresh tea your business bought in 2012? .(kg) D2 How much is the average price of fresh tea per kilogram? (VND/ kg) 83 D3 The volume and variety of fresh tea purchased by the vendor Type Number Volume (kg) Supplier Price (VND/kg) Type Volume (Kg) 2011 2012 2011 2012 2011 2012 Price (VND/kg) 2011 2012 Farmers Cooperative Business Other D4 Who decided the purchase price? Seller Establishments Negotiation According to government price regulation D5 In 2012, the basis of the preliminary purchase tea processing is the other? Yes No D6 (If yes) How much volume may be bought? Number Supplier Farmers Cooperative Farm Business Traders The processing Other Type Type Volume Price Volume Price (kg) (VND/kg) (kg) (VND/kg) 2011 2012 2011 2012 2011 2012 2011 2012 D7 Who decides the price of black tea processing/processed? Seller Establishments Negotiation According to government price regulation 84 E Production cost and product price How much does black tea production cost in the business? (1000VND/kg)? Number A B Price (1000VND) 2011 2012 Items Production cost Tea leaves Labor Packing Fuel Depreciation of fixed assets Overhaul costs Administration expenses Other expenses Product Price G Consumption G1 How many businesses sold volume of dry tea? Number Categories Sales volume (kg) 2011 2012 Average price (VND/kg) 2011 2012 Type Type Type Other G2 What is the percentage of sales to other customers? Number Buyers Traders Household processing Factory Retailers Company / exporters Other Total Rate % 2011 2012 100% 100% G3 Have Enterprises signed a contract with your customers? Yes No G4 If yes, the rate of sales contract? (%) 85 How is it sold under contract rates for different customers? Number Buyers Traders Household processing Factory Retailers Company / exporters Other Total Rate % 2011 2012 100% 100% G5 What businesses have difficulties with the 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 1-2 new products 3-5 new products 6-10 new products 11-20 new products More than 20 products G7 Your business has shops or resellers tea products in which areas? - Thai Nguyen - Hanoi - The other local - Not any where G8 How does the advertising business sell products? Number Forms Advertising with flyers Exhibitors Customer Conference By media Do not Do little Professional 86 Number Forms Do not Do little Professional Build Own Website introduction to business About the Tea Association Website Market Research Approaching potential customers Other activities G9 What are some difficulties businesses have in marketing High shipping charges Unstable demand Other G10 Total revenue of the business 2011 (VND / year) 2012 (VND / year) 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 overcome this obstacle? G14 What is needed to solve business 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 is the total amount of the processing equipment of the business today? .(1000 VND) H2 When did enterprises purchased these devices? H3 What is the price at time of purchase? 87 H4 Which country has produced equipment? H5 Does Enterprise upgrade technical equipments? Yes No H6 If yes, what is the main reason to upgrade? - Backward - Scaling facility - High competition - Other (specify) H7 What is the level of modern equipment compared to other processing firms? - Modern - Normal - Backward - Do not know H8 How can you raise the kind of capital needed for your business? How much is the deposit? No The types of capital Very difficult Difficult Normal Advantages Working 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 business over 400 million H9 Total assets? (VND) H10 Equity? (VND) Highly Advantage Not applicable 88 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 did you manage your business? No The management Yes No Not 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 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 I.3 What is your relationship with your business partners and other organizations? No 10 11 The partners / organizations The collection 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 services Other Partners Unrelated Normal Very Very Good 89 K Difficulties and the Busoiness Proposal K1 What are the difficulties encountered in the enterprise’ business process? Lack of raw materials for processing Equipment for processing of tea Lack of qualified manpower Financial Difficulties Difficulties in marketing products Other difficulty K2 What are your suggestions about state and local policy incentives to support business development of black tea? K3 What are your other aspirations? On month year 20 Inquisitor 90 Appendix B 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 these questions below Information will not be disclosed Thank you for your cooperation Full name: Address: Phone Number Age Gender: What is your daily drink: 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 you like the most? Why? What made you interested in drinking tea: a The quality of tea products b Packaging products c Product Brand When you usually drink tea? a Morning b Noon c Afternoon 91 d Evening e Another time 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 enterprises in the provinces Beautiful Pretty nice Medium Bad Products using tea Black tea Herbal black bag tea Other Tea Thai Nguyen Phu Tho Tuyen Quang 11 Please tick the appropriate box? The average income / month Less than million 1-2 million 3-5 million Greater than million Inquisitor Canned black tea 92 CURRICULUM VITAE TRAN THI HUYEN English name: MARY A PERSONAL DATA Age 36 Date of Birth November 9, 1979 Place of birth Hung Son commune, Dai Tu District Bac Thai province Address Thai Nguyen City, Vietnam Phone/Mobile 0280-3850290/ 0280-2201911 Father Tran Van Kim Mother Pham Thi Hoa B EDUCATIONAL ATTAINMENT Degree School Year Graduated DBA Southern Luzon State University Master of Economics Thai Nguyen University 2007 Upper Secondary Luong Ngoc Quyen High School 1997 Secondary Quang Trung Secondary School 1994 Elementary Thong Nhat School 1991 ... number of issues about the competitiveness of black tea producing enterprises and analyzed the situation of the competitiveness of black tea producing enterprises in Thai Nguyen province 8 Definition... production enterprises, while enterprises are manufacturing black tea To assess the competitiveness of black tea producing enterprises in Thai Nguyen Province, enterprises in Thai Nguyen Province were... improve the competitiveness of the black tea producing enterprises in Thai Nguyen province to meet consumer demand? Hypotheses of the study The following hypotheses were tested in the study: There