A strategic management of Masan Group in the food and beverages retail industry in Vietnam in 2020

A strategic management of Masan Group in the food and beverages retail industry in Vietnam in 2020 and propose the company strategies for both long and short term.

Contents Company Overview: PART I: EXTERNAL ANALYSIS PESTLE 2 Five-force model of competiton External Factor Evaluation (EFE) Matrix OPPORTUNITY .6 THREATS BUILD THE EFE MATRIX PART 2: INTERNAL ANALYSIS The key internal forces 2.Internal Factor Evaluation (IFE) Matrix 11 STRENGTH 11 WEAKNESS 12 BUILD THE IFE MATRIX 13 PART 3: SWOT MATRIX 14 MEASURE SWOT FACTORS 14 DECIDE STRATEGIES 14 PART 4: STRATEGIC IMPLEMENTATION AND EVALUATION 15 Company Overview: Masan Consumer is named Masan Consumer Goods Joint Stock Company, operating as a subsidiary of Masan Consumer Holdings Co… Ltd of Masan Group Established in 1996, as a manufacturer and distributor of food and beverage products, Masan Consumer has quickly maintained its position as an industry leader in the domestic market Up to now, the company's main product lines include:  Food: instant noodles, instant cereals, fish sauce, chili sauce,…  Bevareges: instant coffee, energy drinks, mineral water,… Masan Consumer's brand value is valued at around $305 million, up 113% and is considered the company with the strongest percentage growth PART I: EXTERNAL ANALYSIS ANALYSIS THE KEY EXTERNAL FORCES PESTLE  Political forces Regarding the administration of the Government,the Government has made many efforts in changing the principle of economic management from the direct intervention mechanism to the operating mechanism indirectly by law, through the impact on the business environment The above situation has made the macroeconomic environment stable and favorable for the development of enterprises The political stability and the consistency in policy opinion are large is the factor that attracts a large amount of foreign investment into Vietnam Stable politics bring foreign capital investment into businesses, businesses can rely on that capital to develop production and business, expand market share In short, political stability creates a lot of profits for business  Economic forces Vietnam is said to be one of the few countries that will continue to grow in 2020 The stability of the economy creates favorable conditions for the development of domestic economic sectors, including the consumer goods industry to serve the increasing needs of the people and society Gross domestic product (GDP) in the fourth quarter of 2020 was estimated to increase by 4.48% over the same period last year The Covid-19 epidemic is strictly controlled, the economy gradually returns to normal activities In 2020, Vietnam continued to attract foreign investments despite international travel restrictions FDI disbursement reached USD 20.0 billion in 2020 representing a slight 2% decline After joining the WTO, opening up for Vietnam bigger playgrounds, more challenges, but also more opportunities It is this, which has a great impact on the areas of operation of Masan Food In the fourth quarter of 2020, final consumption increased by 1.48% over the same period last year; exports of goods and services increased by 15.25%; imports of goods and services increased by 14.83% Vietnam's stock market has recovered quickly and strongly, among the top in the world Vietnam's stock market closed 2020 with an impressive recovery, up approximately 15% compared to the end of 2019  Social forces Taste and trend: Vietnam is still a developing country, necessary consumption demands still account for 50% of the total consumption structure and will continue to account for a significant percentage According to a number of investors in the food industry, Vietnam currently consumes a large amount of fast food Regional differences: Vietnam has regions: North-Central-South, each has its own taste So that the demands of people all throughout the country can be addressed, product development is a difficult issue for the food industry Lifestyle: Consumers prefer to consume things with quick usability because of the frantic pace of today's Vietnamese people, their more modern lifestyles, and the fact that they work outside of normal business hours Meeting the needs of all types of enterprises will have a positive development trajectory and the potential to generate profits  Technological forces Modern science and technology used to manufacturing will assist businesses in lowering labor costs and speeding up output Businesses will also give quality items to consumers if they have a closed product quality control system Masan Consumer has invested $ million in the construction of a world-class Product Research and Development (R&D) Center, making it one of Vietnam's largest food and beverage R&D centers Masan Consumer focuses on establishing powerful brands, and as a result, several of its products have quickly risen to the top of their respective markets in the spice, convenience food, and coffee industries  Environmental forces Vietnam borders the Gulf of Thailand to the south, the Gulf of Tonkin and the East Sea to the east, China to the north, Laos and Cambodia to the west Thanks to the favorable geographical location of Vietnam, Masan easily communicates with partners nationwide as well as in polar regions around the world by land, water and air Vietnam also has rich natural resources and the tropical climate is very suitable for farming.Thereby making an abundant source of raw materials for processing for the consumer goods industry  Legal forces In the contemporary Vietnamese market economy, the legal system has become progressively perfect, creating a legal corridor for commercial operations and requiring firms to accept state regulation Simultaneously, the legal system promotes political stability, instills confidence in investors, and facilitates corporate operations To protect consumers, the government has also passed a consumer protection law, a competition law, established a food safety and quality measurement department, Therefore, before implementing Implementing strategies to introduce new products, the company implements an extremely strict product quality control regime Five-force model of competiton  Power of supplier The supplier offers raw materials for the manufacturing process, hence it has a significant impact on the company The quality and cost of the materials have an impact on the product's quality and pricing Masan Consumer has a very positive relationship with its suppliers; the two parties work together and support one another, ensuring that the company's commercial activities are constantly steady and proactive Masan Consumer is continually on the lookout for low-cost suppliers in order to compete with other firms Masan has bargaining strength with suppliers as one of Vietnam's major companies, allowing it to obtain costeffective rates  Direct competitiors According to experts in consumer goods, this is a rather fierce market There are too many companies participating in this market, such as: Kalbin Fish Sauce, Ong Tay Fish Sauce, Vina Acebook Vietnam Joint Stock Company, Asiafoods Food Joint Stock Company, Cholimex Food Joint Stock Company  Power of consumer Masan Consumer's customers include both end-consumers and intermediaries Currently, the Company is applying exclusive distribution, so there is very little price competition, products in different regions always have the same price and that price is determined by the company With the launch of many products in many different segments, Masan Consumer has exposed many types of customers with different incomes Masan, on the other hand, is constantly required to implement client retention and care programs Consumers can abandon their products at any time and move to those of competitors This is a persistent strain on the business that never goes away, requiring it to constantly develop  Potential of new competitors Because of the peculiarities of the FMCG business, there is a considerable danger of new competitors joining the market Customers have more options for newer products because of low-cost products of equal quality Despite the fact that Masan Consumer is a significant manufacturer with extensive industry knowledge, it must be mindful of these competitors  Potential of substitute Masan Consumer sells instant noodles, oatmeal, fish sauce, soy sauce, and chili sauce, among other things Masan is up against a slew of replacement products in addition to quality and price concerns Consumer demand is growing, and they desire good and quick meals As a result, coupled with the emergence of fast food, street food ascended to the throne Bread, porridge, and pho, bread, vermicelli, vermicelli….bring consumers rich flavors, and suit each region's taste External Factor Evaluation (EFE) Matrix OPPORTUNITY O1 Large market capacity, high growth potential With a population of over 86 million people, the average economic growth rate is about 7.5% / year A World Bank statistic shows that household consumption in Vietnam is equal to 63% of the country’s GDP Thanks to the population structure it is among the youngest in the world, with 56% of the population under 30 years of age Total consumer spending in Vietnam is expected to double and reach approximately 173 billion USD by 2020 O2 Integration brings many opportunities to expand the market In addition to the great opportunities in the domestic market, Vietnam’s participation in the ASEAN free trade area and becoming a member of the WTO has boosted exports in general and exports of agricultural products and processed foods in particular The integration process has a huge impact on the food industry businesses The food industry has expanded international cooperation, multilateralization and diversification of cooperation with foreign countries O3 The people’s consumption demand for processed food is increasingly large and diverse The habit of using foods processed from milk, cooking oil, soft drinks, … has been formed and increasingly developed Consumer demand for processed foods is growing and diversified Therefore, this is also an opportunity to stimulate the development of Vietnam’s food processing industry O4 The support of government Because Masan Consumer produces consumer goods, which are essential items of people’s lives, they receive support from government agencies especially in the especially in the context of the covid 19 epidemic, Reducing value-added tax to 5%, personal income tax exemption and reduction, corporate income tax exemption and reduction, delaying tax payment time… are proposals related to tax policies to support businesses to helping businesses reduce cash flow pressure in the current difficult context O5 Vietnamese people tend to use more domestic goods Vietnamese consumers prefer to use domestic products because it is cheaper and the taste is more suitable for them than imported goods O6 Being supported by customers Being a brand developed over many years, Masan Consumer is a strong brand, winning the trust of consumers in Vietnam Masan also regularly organizes many promotions to thank customers THREATS T1 High competition Currently, consumer goods and beverage products (fish sauce, instant noodles, instant coffee…) are subject to fierce competition from domestic and foreign enterprises such as Vina Acecook, Asia, Micoem, Trung Nguyen, Trung Thanh, Tan Hiep Phat In addition, in the chaotic life, people have to work overtime, they don't have too much time to cook, so they choose dishes such as pho, bread in the canteen or sidewalk restaurants, Pressure from substitute products is also a challenge for masan consumers T2 Demand for food safety increases Food safety and hygiene is a problem of the whole society, this is also a big challenge for the company, they need to take measures to check the supply of raw materials and product quality after production is complete Do not let production expansion quickly affect product quality Masan always have to improve product quality to meet the regulations on food hygiene and safety and protect the health of consumers The information related to health has a great impact on consumers’ psychology so issues related to authentic hygiene and safety will be a strictly controlled issue T3 Responsibility to protect the social environment increases rapidly Masan Consumer needs more machines and equipment to treat waste after production, not to affect the living environment of the community T4 Prices fluctuate in the direction of sharp increase Increasing inflation makes commodity prices also increase, Masan Consumer needs to take measures so that when the price increases, the quality must also increase T5 Differences in taste, consumption culture Vietnam is divided into three regions: north, central, and south, each with its own distinct flavor Product creation is a difficult issue for the food business to overcome in order to meet the demands of people all throughout the country BUILD THE EFE MATRIX Numbers Internal factors Weight Rating Score Opportunities O1 Large market capacity, high growth 0.14 0.56 0.12 0.36 0.1 0.4 0.07 0.28 potential O2 Integration brings many opportunities to expand the market O3 The people's consumption demand for processed food is increasingly large and diverse O4 The support of government (Policy to reduce corporate income tax, delaying tax payment time) O5 Vietnamese people tend to use more domestic goods 0.05 0.15 O6 Being supported by customers 0.05 0.1 Threats T1 High competition 0.14 0.56 T2 Demand for food safety increases 0.12 0.36 T3 Responsibility to protect the social 0.07 0.21 0.08 0.24 environment increases rapidly T4 Prices fluctuate in the direction of sharp increase T5 Differences in taste, consumption 0.06 0.12 culture Total 3.34 Assessments: Masan Consumer's total score of 3.34 indicates that company is very responsive, far exceeding the industry norm in terms of pursuing initiatives to capitalize on environmental opportunities Masan Consumer, on the other hand, requires better procedures to respond to each recognized threat PART 2: INTERNAL ANALYSIS The key internal forces  Marketing development Masan, the leading consumer goods company in Vietnam, also prioritizes promoting marketing activities to be able to compete more effectively with foreign brands From the very first days of its establishment, Masan has determined that the most important strategy is to build a strong brand Masan has pioneered in branding for condiments and everyday consumer food products Masan currently owns a list of brands with sales of over VND 500 billion: In the condiments industry, there are Chin-su soy sauce, Tam Thai Tu and Nam Ngu fish sauce; In the convenience food industry, there are Omachi and Kokomi noodles and in the beverage sector, there are Vinacafe, Wake-Up coffee and Wake-Up 247 energy drink However, there are also many rumors about masan products that have caused loss to consumers and how to prevent such rumors is the task of the marketing team In 2021, Masan Consumer expectd to launch about 50 new inventions serving buyers  Finance function Masan Consumer marked an important milestone when net revenue reached $1 billion for the first time in 2020 Masan Consumer’s net revenue and EBITDA grew by 27.2% and 22.4%, respectively compared to 2019 Masan Consumer’s growth reached more than 20% for consecutive quarters thanks to its ability to innovate and invest in brands New innovations contribute 43% to Masan Consumer’s revenue growth in 2020 Financial ratio Current Ratio Quick Ratio Cash ratio Inventory Turnover Total Assets Turnover Accounts Receivable Turnover Total debt ratio Profit Margin Return on Total Assets (ROA) Masan Consumer 0.7805 0.7227 0.3536 20.0984 0.9976 72.9252 0.3522 19.9136% 19.0966% Masan Consumer has excellent inventory management and debt recovery capabilities (Inventory Turnover = 20.0984; Accounts Receivable Turnover = 72.9252) Liquity and profitability are both high ( quick ratio = 0.72; ROA = 19.0966%; ROE = 29.4781%)  Human resources Masan always offers attractive remuneration and working environment to attract and retain talents Salary is higher than the average Rated as one of the Top 100 enterprises with the best working environment in Vietnam 2016 (According to Anphabe and Nielsen), Masan is the desired workplace of many people  Operation and Cutural Environment Principle of operation " Converging and nurturing aspirations & talents to seek breakthroughs to enhance the benefits of products and services for customers Therefore, customers will reward us with leading sales and profits and sustainable growth." Operating principles Masan Consumer Builds people with qualities: Talent and creativity - Leadership qualities Work mastery - Integrity and transparency Thereby, all activities of Masan Consumer adhere to principles: • Linking the interests of customers, shareholders and employees • Work in team , • Respect each individual • Never stop learning to innovate • Goal oriented and end result • Trust and commitment Company culture Masan Consumer builds shared values for business leaders with these core elements:Passion, working together,winning 2.Internal Factor Evaluation (IFE) Matrix STRENGTH S1 Strong brand image, large market share The company is a big brand name in the market, accounting for 70% market share nationwide According to statistics, 98% of Vietnamese households have at least one Masan product S2 Strong financial resources The company with very strong financial potential, this makes Masan Consumer easy to build trust in investors, thereby attracting a large amount of capital from them The enterprise sets clear goals and orientations: “Becoming a company that owns the top three food brands in Vietnam, is a company with sales of over 100 million USD, has high attractiveness to the food industry institutions, large investors” S3 Multiple product distribution points Very strong distribution network, especially “Chinsu”, including distribution centers across Vietnam, strong sales force with 162 exclusive distributors with 1628 sales staff, helping Masan bring products products to more than 164,000 points of sale nationwide S4 Advanced research and production technology Modern, synchronous machiner, using production technology, closed equipment line, high automation, applying strict standards on food safety, efficient production system with highest standards S5 Members of the management board have experience The management team is highly qualified, experienced, and the executive board consists of experts with many years of experience, who have worked in multinational companies, such as Unilever P&G, Nestle, and having a thorough understanding of the domestic market The management board of Massan Consumer working in the leadership team such as Marketing/Sales, R&D research or from the field of raw material supply chain management… Business usually organize internal and external training courses on expertise, professional skills, life skills, and other topics on a regular basis Skills training, seminars, and training courses are all examples of internal training produced as a result of reading culture Meet and Greet, Teambuilding, etc S6 There is a difference from competitors Masan Consumer's products are diverse and different from competitors including soy sauce, fish sauce, chili sauce, instant noodles, porridge, sausages, instant coffee, nutritious cereals and bottled water S7 Meet food safety and hygiene standards European HACCP, ISO 9001:2000 quality management system, TPM comprehensive productivity maintenance WEAKNESS W1 The source of raw materials is not really stable Most of the raw materials are not imported directly and through distributors if they cannot find the sourcing of raw materials and materials that are suitable for production needs or the price, contractual terms are not suitable for productivity will definitely affect the business W2 Marketing method With information about using 3MCPD in soy sauce, seasoning with super MSG, Omachi noodles with only 5% pure potatoes or Tien Vua noodles containing tranfat, going against the market strategy has been criticized by some experts In terms of ethics, skeptical consumers make a bad impression on businesses W4 Capital mobilization Enterprises have difficulty in mobilizing capital with high interest rates W5 Dependent on available networks Masan relies heavily on its relationships with a network of distributors to sell products Therefore, the business, financial, performance and outlook of the Company will be affected if the relationship goes wrong BUILD THE IFE MATRIX Numbers Internal factors Weight Rating Score Strengths S1 Strong brand image, large market 0.12 0.48 share S2 Strong financial resources 0.1 0.4 S3 Multiple product distribution points 0.1 0.3 S4 Advanced research and production 0.08 0.24 0.07 0.21 0.06 0.12 0.05 0.1 0.1 0.4 technology S5 Members of the management board have experience S6 Products are diverse and different from competitors S7 Meet food safety and hygiene standards Weaknesses W1 The source of raw materials is not really stable W2 Marketing method 0.08 0.24 W3 Personnel fluctuate frequently 0.07 0.14 W4 Multiple levels of management 0.06 0.12 W5 Dependent on available networks 0.06 0.12 W6 Capital mobilization 0.05 1 Total 0.05 2.92 Assessments: Masan Consumer's total score of 2.92 proves that Masan Consumer apart from being a strong brand, the company is also very strong internally PART 3: SWOT MATRIX MEASURE SWOT FACTORS Opportunities Strengths Weaknesses S/O W/O S1+S2+S3+O1+O2+O3=> Market development strategy S/T Threats T1+T2+S2+S4=> Product development strategy W1+ O4 => Backward integration strategy W/T T1+W2=> Market Penetration DECIDE STRATEGIES Market development strategy Vietnam is a country with a large population and an increasingly high and diverse consumer demand for processed foods, taking advantage of that strategy to expand the market and open more stores across the country will help the brand's recognition brand, Masan's revenue increased significantly Moreover, Masan is already a well-known brand with abundant financial resources and many distribution points, so the strategy of market expansion is feasible In addition, integration also brings many opportunities for Masan to continue developing not only domestic but also foreign markets, exporting more with more diversified products, which is expected to be as successful as exporting Chinsu before Market Penetration If marketing is not effective, the business will be weak against other competitors, so we need to seek increased market share for present products or services in present markets through greater marketing efforts Backward integration strategy Masan's source of raw materials is not really stable, most of the materials are not imported directly, but must go through distributors, so it is extremly necessary to find ownership or increase control of the company's suppliers The source of raw materials will be guaranteed in both quantity and quality, solving consumers' concerns about food hygiene In addition, the government also has supportive policies such as tax reduction when businesses invest, so using backward integration strategy is reasonable Product development strategy Masan has modern processing technology and abundant financial resources, so it is not too difficult for Masan to invest in product development, high quality and diversified products are an advantage for Masan to compete with other competitors competitors in the market PART 4: STRATEGIC IMPLEMENTATION AND EVALUATION Market development strategy Actively building a system of self-selected supermarket chains to enter the retail market, anticipating new consumption trends Market research, establishing relationships with goods suppliers, developing distribution systems to expand markets in small cities as well as rural areas are Masan's second growth drivers Cooperate with foreign distributors, export consumer goods to foreign countries In 2020, Masan built the first chain of 25 self-selected supermarkets to enter the retail market Market Penetration Advertising: Invite celebrities to introduce products in prime time frames to attract consumers' attention Widely advertised on domestic magazine packaging and free exploitation on Internet, social networks, shopping malls, display actively masan's products in easily visible places at supermarkets and retail stores Backward integration strategy Invest in the construction of farms, study geographical locations and use modern machinery to maximize productivity, save costs, thereby reducing costs and increasing competitiveness in the market In addition, it is recommended to cooperate with domestic suppliers who have a guaranteed source of raw materials, near the factory, convenient for moving Product development strategy Product features: Delicious product quality, suitable for Vietnamese people, does not contain harmful chemicals, has a certificate of health department, attractive color, delicious taste, stimulating aroma Consumption Create a new image for packaging: Chinsu's unique, eye-catching yellow packaging impresses consumers In particular, the paper label is replaced with a film that can limit direct sunlight and affect the quality inside Boxes for all products are packaged in standard packaging for easy transportation and distribution Product brands: Use easy-to-read, easy-to-remember labels Always emphasize and care about consumers' health with Slogan References: “Annual Report of Masan Consumer in 2020” ... a food safety and quality measurement department, Therefore, before implementing Implementing strategies to introduce new products, the company implements an extremely strict product quality... development strategy W1+ O4 => Backward integration strategy W/T T1+W2=> Market Penetration DECIDE STRATEGIES Market development strategy Vietnam is a country with a large population and an increasingly