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GROUP SUJECT: ORGANIZATION BUYER BEHAVIOR Vietnam Dairy Products Joint Stock Company VINAMILK I Introduction about company and product Vinamilk is the largest dairy company in Vietnam Based on the UNDP 2007 Top 200 largest firms in Vietnam report, it was also the 15th largest company in Vietnam and formerly the most valuable public company listed in Vietnam In 2010, it is the first company in Vietnam to be included in the Forbes Asia's 200 Best Under A Billion list that highlights 200 top-performing small- and mid-sized companies with annual revenue under US$1 billion - - - Development-history 1976: Vinamilk was established 1985: Received the Third-Class Labor Medal 1991: Received the Second-Class Labor Medal 1995: Inaugurated the first dairy factory in Hanoi 1996: Received the First-Class Labor Medal 2000: Awarded the title “Labour Hero of the Renovation Process” 2001: Inaugurated Can Tho Dairy Factory 2003: Inaugurated Binh Dinh and Saigon Dairy Factory 2004: Inaugurated Nghe An Dairy Factory 2005: received the Independence Medal III 2006: Inaugurated the first dairy farms in Tuyen Quang 2008: Inauguration of the second dairy farm in Binh Dinh Inaugurated Tien Son Dairy Factory 2009: Construction of Nghe An dairy farm Thong Nhat, Truong Tho and Sai Gon dairy factories have been awarded the Certificate of "Green Enterprise” by the Ministry of Natural Resources and Environment for achievements in environment protection 2010: • Construction of Thanh Hoa dairy farm • Received the Independence Medal II • Vinamilk applied new technology, installed advanced equipment and modern machines to all of its factories Besides, Vinamilk also established Public Health Nutrition Consultant Centers in the country and launched over 30 new products • International investment in New Zealand and over 20 other countries 2012: Vinamilk inaugurated Danang Dairy Factory, Lamson Dairy Factory, Vietnam Beverages Factory with modern production lines originated from the - - - - - - US, Denmark, Germany, Italy and the Netherlands Construction of the fifth dairy farm in Lam Dong 2013: Commencement of new dairy farm construction in Tay Ninh and Ha Tinh Inaugurated the super dairy factory in Binh Duong 2014: Vinamilk has become a familiar brand to Vietnamese and international consumers after 38 years of continuous innovation and development Vinamilk has been proving itself of strong spirit of constantly improving, innovating, seeking new directions so that the Company gets stronger and stronger Vinamilk built Nhu Thanh dairy farms in Thanh Hoa 2015: • Commencement of Thong Nhat - Thanh Hoa dairy farm construction • Vinamilk raised its stake in Miraka Limited Company of New Zealand from 19.3% to 22.8% 2016: • The milestone marks the 40-year journey of formation and development of Vinamilk (1976 - 2016) to realize the "Vietnam Milk Dream" and affirming its position on the world dairy industry map • Vinamilk pioneered organic market in Vietnam with USDA certified Vinamilk Organic Fresh Milk • Vinamilk acquired 100% stake in Driftwood Dairy Holding • Inauguration of Angkormilk dairy factory which was invested by Vinamilk • Vinamilk official launched its brand in Myanmar, Thailand and expanded operations in ASEAN 2017: • Inauguration of the Organic dairy farm: Pioneering in advanced nutritional trends - Organic, Vinamilk invested and inaugurated the first European Organic dairy farm in Dalat, Vietnam • Launched the first European 100% Organic Milk produced in Vietnam • Vinamilk listed in the Global 2000 list 2018: • Inaugurated the Thong Nhat - Thanh Hoa high-tech dairy cow farm • Vinamilk launched the first 100% A2 Fresh milk product in Vietnam 2019: • Inaugurated Tay Ninh Dairy Cow Farm: With a scale of 8000 dairy cows, on an area of nearly 700ha and comprehensive 4.0 technology investment • Commencement of the project of Organic Vinamilk Lao-Jagro dairy f • arm in Laos: The joint venture project of Vinamilk and businesses of Laos and Japan, with a scale of 20,000 cows on an area of 5,000 hectares in phase It is expected to grow to 100,000 cows on an area of 20,000 hectares • Vinamilk is in the Top 200 companies with the best revenue of over billion Asia Pacific (Best over a billion) The list was first published by Forbes Asia In particular, Vinamilk is the only representative of Vietnam in the food industry, stand beside with the big names of the regional economy VISION To become a world grade brand in food and beverage industry, where people put all their trust in nutrient and health products MISSION To deliver the valuable nutrition to community with our respect, love and responsibility CORE VALUES To become a world grade brand in food and beverage industry, where people put all their trust in nutrient and health products INTEGRITY: Integrity and transparency in actions and transactions RESPECT: To have self-respect, to respect colleagues To respect the Company and partners To cooperate with respect FAIRNESS: To be fair with employees, customers, suppliers and other parties ETHICS: To respect the established ethical standards and act accordingly COMPLIANCE: To comply with legal regulations, the Company’s Code of Conduct, and the Company’s procedures and policies PRODUCT Organic nutrients, Liquid Milk, Vinamilk Yogurt, Powdered milk, Infant Cereals, Special Nutrition Products for Adults, Condensed Milk, Beverages, Ice Cream, Cheese, Soymilk, Viet sugar, Announcement of Products II STRUCTURES The organization Chart of Vinamilk is shown in a professional manner in which departments are divided systematically and reasonably with specific hierarchy of responsibility for each member and function in the company This structure helps the company to operate in the most effective way and fosters the collaboration among departments, thus making a strong Vinamilk III Factors affecting the Organization buyer behavior A Environmental factors 1.Demand for product: The needs and satisfaction of human needs are the driving force behind the activities, regulating the behavior of individuals and groups in society When the economy develops, the level and income of people increase, leading to changes in a whole system of needs, wants, preferences, behavioral characteristics, purchasing power, and spending structure The most obvious change that anyone can notice is a change in physiological needs People are not interested in eating to be full but they are more interested in eating something delicious, satisfying and healthy This is a great business opportunity for businesses 2.Economic outlook: Input costs related to key ingredients such as milk powder and sugar have increased significantly since the end of 2020, affecting the business results of the business In general, business activities still have to depend on many factors, especially the COVID-19 epidemic Experience in 2020 shows that, thanks to self-control in the domestic fresh milk material area, combined with a network of imported raw materials suppliers from many countries, Vinamilk ensures stable production activities, meeting the needs of consumers domestic consumption as well as export 3.Supply of materials Vinamilk's primary supply sources are strictly managed: The investment in dairy farms that actively source fresh milk materials is an important strategic goal and a long-term direction to help Vinamilk improve the quality and increase the localization rate of raw materials The herd of cows supplying milk to the company includes Vinamilk's farms and farmers who have signed contracts to sell milk to Vinamilk with approximately 150,000 cows Supplying more than 1000 tons of raw milk per day to produce fresh milk products With the plan to develop new farms, the company will bring the total number of Vinamilk's cows from farms and households to about 160,000 by 2017, Vinamilk's goal is to develop the cow herd to 40,000-50,000 by 2021 With the expected output of dairy materials by 2021, it will increase to 1500-1800 tons/day Vinamilk's tight supply chain management strategy ensures an abundant supply of pure fresh milk products to millions of Vietnamese families Vinamilk has set a goal of developing fresh milk material areas to gradually replace imported raw materials by supporting farmers to consume products and constantly developing milk purchasing agents If in 2001 the company has 70 agents to transship fresh milk So far, there have been more than 90 agents across the country with the amount of milk purchased about 230 tons/day These transshipment agents are systematically organized and widely distributed Help farmers deliver milk conveniently in the fastest time The input supply stage of Vinamilk dairy company includes: imported raw materials and raw materials purchased from domestic cow farmers Vinamilk continues to maintain the strategy of prioritizing the selection of raw material sources from areas with advanced agriculture with high standards and requirements for ensuring food quality and safety Imported dairy ingredients can be imported through intermediaries Or proceed to import directly and then be transported to the factory Currently, Vinamilk's main raw material suppliers are the United States, New Zealand and Europe (How is the supply of raw materials? Is it scarce, is the price high or low?) 4.Technology In the past years, Vinamilk has invested more than VND 6,500 billion from its own capital to invest in building many factories with high automation level Vinamilk's milk factory is equipped with a pasteurized fresh milk production line with modern equipment and leading advanced production technology today The factory operates on an automatic, closed line, from input material to product output From the first dairy factories, Thong Nhat Dairy Factory and Truong Tho Dairy Factory Up to now, Vinamilk has a total of 13 factories across the country, stretching from North to South The most prominent is a super milk factory producing liquid milk with a pasteurized fresh milk production line with modern equipment and leading advanced production technology 5.Culture a Cultures and subcultures As we all know, culture is a very important factor that has a profound influence on the buying behavior of customers Culture is the basic factor that determines the will and behavior of a person Vietnamese people when buying goods are always influenced by cultural factors of national identity that affect the values of choice, people Marketers need to pay attention to these factors to design marketing strategies or advertising messages, colors, product designs, salespeople's attitudes, etc Culture is formed and developed over many generations and is passed on from generation to generation Each culture has smaller subcultures that create more specific characteristics and a degree of social integration for its members Subcultures include ethnic groups, religions, racial groups, and geographic regions Many subcultures make up important market segments, and marketers often have to design products and programs according to those needs People of different cultural branches will have different interests, passions and behaviors Sustainable core cultural values called cultural identities tend to be enduring Therefore, marketers have the ability to change core values, so they often business in a way that adapts to traditional cultural values, avoiding violating it Secondary cultural values tend to change over time Normative cultural values are beliefs formed on the basis of group consensus regarding rules or institutions about the behavior of each group member and which are self-perceived by individuals Therefore, normative cultural values play an important role in the need identification process and influence the steps in the buying decision process Vietnam is not a country with a tradition of milk production, so the majority of people not have the habit of consuming milk In addition, compared to other foods and the income of the majority of families in Vietnam, especially in rural areas, the price of dairy products in Vietnam is still quite high Drinking milk becomes an indispensable need in daily life b Social class The existence of social classes and classes is an inevitable problem of society It can be defined: Social classes are relatively stable groups within a social framework that are arranged hierarchically and are characterized by similar values, interests, and ethical behavior in different regions of the world members The formation of social class depends not only on a single factor, which is money, but on a combination of cultural level, occupation, value orientations and other specific factors A person's status is high or low depending on what class they belong to in society With a particular person, the transition of higher social class or falling into a lower social class is a common phenomenon The biggest concern of marketers is that people from the same social class will tend to behave the same, they have preferences about goods, product brands, choosing sales locations People with high social status and high income will choose for themselves the most expensive quality dairy products, those with lower social status will choose for themselves the products that are suitable for their income import For example, the elderly class belongs to the high-income class, they will use milk as an indispensable need such as condensed milk, calcium powdered milk, and for children, mothers often choose for their children products age-appropriate powdered milk products, such as dielac nutritional supplements to increase weight and height for children We can clearly see the difference in the choice of milk between urban and rural people…the tendency of urban people to use milk is much higher than that of rural people For women, they can choose beauty milks for facial skin and weight loss As for the poor in ethnic minority areas, for example, their income and awareness are still very low, so they are not interested in dairy products as well as their buying behavior is very limited With a long-term reputation of more than 10 years, Vinamilk milk has gained the trust of consumers not only in price but also in product quality with the current human development trend Customers buy Vinamilk milk from all walks of life They choose Vinamilk product because it has high quality, reasonable price and is the leading dairy company in Vietnam With a wide distribution channel throughout Vietnam, Vinamilk dairy products are present in all supermarkets and grocery stores In order to increase the amount of goods consumed, businesses must have policies to promote, reduce prices, or give gifts to stimulate consumption and impress customers At the same time, it is also necessary to inform the uses and benefits benefits of products to consumers because consumers only choose products when they fully realize the value that they will receive when buying and using 6.Politics Vietnam is a stable, war-free country - favorable for the development, trade and purchase of goods between organizations and organizations This is a factor that affects all business industries in a territory, institutional and legal factors can threaten the viability and development of any industry When doing business in an administrative unit, businesses will be required to comply with the legal institutional elements of that area An institution with high stability will be able to create good conditions for business activities, and conversely, unstable institutions will have a negative impact on business activities in its territory 7.Competition It is well known that the dairy market in Vietnam is a young market with great potential, with the demand for dairy products increasing over the years (the dairy industry is forecasted to have an average growth rate) about 15%/year for the next years) High growth rate, lucrative profit (Vnamilk is one of the companies with the best growth profit on the stock exchange) is clear that the Vietnamese dairy market is an attractive market that is hard to ignore That will certainly attract many new competitors to the industry as well as the dynamism and fierce competition of existing competitors in the industry such as Abbott, Mead Johnson, Danone (Dumex), Arla, TH, Ba Vi, Moc Chau, Bong Milk, to win market share This competition will certainly be a big threat for Vinamilk, in which there are significant competitors with great financial potential such as Abbott, Mead Johnson, Danone or TH Milk - a company that has just invested more than 100 million USD from the Israeli government to develop the largest dairy herd in Vietnam These are certainly fierce market competition For example, in the case of TH Milk, although it is a new company entering the market (2010), with a methodical approach (from raw materials, to sales, to marketing) it has attracted a lot of good consumers high income interest and use the product If it continues the current way, TH Milk will rise to be one of Vinamilk's significant competitors in the next years So who will the market opportunity be for? Businesses still have a lot of opportunities for the Vietnamese dairy market Vinamilk has been established for more than 30 years……A period of time is enough to make a brand name as the leading dairy producer in Vietnam Although more and more domestic dairy companies are born, along with competition with imported goods, with the vision "Becoming the number one belief in Vietnam in nutrition and health products for human life" " and the mission "Vinamilk is committed to providing the community with the best nutrition with its own respect, love and responsibility for human life and society", Vinamilk will succeed on the path of development mine B Organizational Factors 1.Target By 2030, it will dominate the Asian market for nutritional and health products by about 30% of the market share By 2025, 15 manufacturing plants will be built in China, India, Indo and Thailand By 2030, 500,000 distribution points will be completed in Asia Strategy *AT THE FOREFRONT OF HIGHLY APPLICABLE INNOVATION Focusing on the dairy industry and dairy-related products, which is the core business that makes up the Vinamilk brand Continue to research and develop many new products with the aim of innovatifying, expanding and diversifying the product portfolio on the basis of matching the tastes and needs of consumers; at the same time, it gives consumers a rich and convenient experience *STRENGTHENING ITS LEADING POSITION IN VIETNAM'S DAIRY INDUSTRY Priority is given to exploiting the domestic market with great development potential Expanding penetration and covering rural areas with popular product lines, where the growth potential is still huge Promote the focus on the high-end product segment with many added value, especially in urban areas Continue to build a large and strong domestic distribution system, increase market share and maintain Vinamilk's leading position in the market *BECOME THE MOST VALUABLE DAIRY COMPANY IN SOUTHEAST ASIA Be ready for mergers and acquisitions (M&A) activities and expand strong partnerships with partners in all three directions of horizontal, vertical and combined integration Priority is given to finding M&A opportunities with dairy companies in other countries with the aim of expanding the market and increasing sales Continue to penetrate new export markets with the strategy of transforming the traditional export model of goods to forms of deep cooperation with distribution partners in new key markets Structure and organization At Vinamilk, the Board of Directors has established 04 specialized committees under the Board of Directors as follows: The establishment of these subcommittees to assist the Board in the performance of specific responsibilities and the good performance of its supervisory duties The Board of Directors has also established financial restrictions for operating targets and investment expenditures, procurement of goods and services, and in order to optimize operational efficiency, which has clearly decentralized to the relevant Board subcommittees to review and approve transactions within the aforementioned limits In addition to the special issues that require the approval of the Board of Directors, the Board is also responsible for the review and approval of the annual budget, financial plans, financial statements, business strategies and important transactions, such as mergers and acquisitions, divestment, funding and investment proposals, and also the responsibility to review and approve transactions that exceed certain thresholds System When there is a need for goods, services, technical supplies, the department needs to make a voucher or a plea The voucher is full of signatures of the parts: the request department, the director of the approval request department, the procedure for the autograph warehouse receive lag of supplies, goods,or services thatnolonger exist or are not in sufficient demand This avoids the caseof goods in stock but still makes purchases The voucher will be transferred to the administrative department, then the administrative department to the supplies department.The supplies department will conduct contact with the supplier, after which they review, evaluate and select Procedures The Company will have to comply with the "Supplier Selection Process for Goods and Services" - Check the goods - Checking the arising of new goods or adding new suppliers for the service of goods in use, the regulations on sample inspection must be implemented as follows: Goods have issued technical requirements: the supplier will send the sample to the import and export department of the company The Import and Export Department shall make a proposal to inspect the material/packaging samples to transfer the inspection plant and notify the results - Bid/offer - Browse the provider - Sign an economic contract - Receiving goods/acceptance C Interpersonal Factors Influence There are many people involved in the procurement process of manufacturing enterprises with different positions, authority, empathy and persuasion Everyone has the ability to influence others and be influenced in return 2.Expertise When conducting technological innovation, purchasing goods, products or services Buyers must have a certain expertise in the product as well as knowledge of the product they need Therefore, if you decide to buy products from a certain supplier, Vinamlik has many experts to check and verify the quality At the same time, having specialization in purchasing decisions will make the company increase the value of products and boost the economy of the business 3.Authority The activities related to studying on ingredients composition, improvement and standardization of testing methods are regularly implemented by Research and Development Center, Food Safety Assurance Department and Production Department Moreover, Vinamilk also coordinates with the National Institute of Nutrition and testing centers to develop and complete processes and methods for testing and controlling food safety and hygiene These divisions will decide on the purchase of Vinamilk's goods and raw materials B Individual factor Each person involved in the buying decision process has his or her own motivations, perceptions, and tendencies These are influenced by factors such as age, income, academic background, qualifications, personality, and risk regimes and thus shape different buying styles of these brands this person the buyer RISK Due to the import of dairy materials, domestic production costs depend on fluctuations in the world The issue of milk safety and quality is one of the factors that strongly affect the dairy industry Last time, scandals such as milk with Melamine; Gunpowdercontaining milk is making milk consumption difficult IV The Business Buying Process STEP1: Problem recognition According to the Ministry of Industry and Trade, in 2020, Vietnam's milk export turnover reached 302.7 million USD, up 10.5% compared to 2019 The reason vietnam dairy industry exports have grown positive, according to the Vietnam Dairy Association is because many enterprises have been investing in equipment, applying technology with high level of automation on a regional and world level, many farms meet Global GAP, VietGAP, organic farms aiming to increase production, quality, food safety, product diversification and deepening access to the dairyvalue chain, production Milk products in domestic and foreign markets Vinamilk has been purchased from the company's farms and from nearly 8,000 dairy households across the country with a volume of about 215,000 tons of cow's milk with a total volume of about 215,000 tons of cow's milk It's worth about $3,000 billion In particular, the purchase output of farmers is 178,000 tons of milk with a total value of about VND 2,200 billion The demand for Vinamilk's milk source is very large Therefore, the purchase of Vinamilk's milk is an important issue that determines the company's development and revenue factors STEP 2: General need description Raw materials purchased from cow farmers Domestic cattle farms have the role of providing input milk raw materials for production through milk and milk collection stations collected from farms must always meet the quality standards signed between Vinamilk and domestic dairy farms Cow's milk was purchased from Vietnamese farmers through many inspections at the general procurement stations, with a team of experts supporting her farmers on cow farming techniques, feed, barn cleaning, how to milk, how to store and buy milk , Raw milk after being purchased and cold letters in the tank cars when arriving at the factory are checked many times before when put into production absolutely not accept milk of poor quality, containing antibiotics Raw milk must undergo rigorous inspection when receiving targets to ensure compliance with regulations in The Thong 29/2017/TT-BNNPTNT dated December 29, 2017 on National Technical Regulations on Raw Milk Products by the Minister of Agriculture and Rural development is issued including: - Senses: freshmilk, natural - aroma, no strange smell Ensure dry matter, fat - Acidity - Microbiological indicators - Heavy metal content - Pesticides, veterinary medicines - Milk sources from healthy cows, not use sick cow's milk STEP 3: Product specification This is the stage where the organization's experts evaluate the advantages and disadvantages of technical and economic goods and equipment on the basis of cost-effectiveness analysis During this phase the organization needs to answer the following questions: • What value does the expected purchase bring to the company? Is it worth the cost? • Is all the functionality of the item needed? • Is there a cheaper substitute with similar features? • Are there other similar suppliers with cheaper prices? • Can the company produce its own? • With a turnover of nearly 60 trillion VND/year, Vinamilk is currently the No dairy company in Vietnam Vinamilk has shown its right direction in taking the initiative in raw milk materials by expanding the scale of dairy cows, while simultaneously improving the output and quality of raw milk Thus, it can be seen that the cost of the research is completely commensurate with the profit obtained Vinamilk has actively acquired the supply, so they have had a huge competitive advantage in price compared to other companies in the same industry STEP4 + STEP 5: Supplier search and Supplier selection Vinamilk company has searched and associated with farmers to deploy raw milk procurement According to Vinamilk, raw milk purchased for processing must absolutely comply with the National Technical Regulation QCVN 01-186:2017/BNNPTNT issued by the Ministry of Agriculture and Rural Development on December 29, 2017 Ensuring product quality, food safety and hygiene, and protecting consumers' health is the ultimate priority, and no concessions are allowed at any stage from production to distribution, from breeding to factory Vinamilk applies the world's highest standards to ensure that dairy products delivered to consumers are of good quality and are food safe according to international standards Vinamilk surveys and evaluates barn infrastructure and dairy cow raising standards If the milk does not meet the contract's standards, Vinamilk will resolutely not purchase it and will only consider purchasing it again after the dairy farmer has overcome the milk quality problem The company has dairy farms in Tuyen Quang, Lam Dong, Thanh Hoa, Nghe An, with modern technical equipment system, each cow is wearing an electronic chip to check milk production exact individual And many cooperative cattle raising households in Ho Chi Minh City, Lam Dong, Long An, provide fresh milk for the company Main suppliers: THONG NHAT THANH HOA DAIRY COW COMPANY LIMITED, VIETNAM DAIRY COW ONE-MEMBER COMPANY LIMITED From households, domestic cow farms Farm households raising cows, cow farms have the role of providing input milk materials for production through milk collection stations Milk purchased from farms must always meet the quality standards signed between Vinamilk and domestic dairy farms Raw fresh milk must undergo rigorous testing when receiving the following criteria: Sensory, ensure greater fat dry matter, freshness, acidity, microbiological criteria, heavy metal content, pesticides, veterinary drugs, origin (do not use milk of sick cows) Particularly for the production of pasteurized fresh milk, fresh milk must strictly ensure freshness, not be precipitated by 75degree alcohol - Large farms, such as: the farm of DELTA Joint Stock Company (HCMC) herd size: 1000 heads, Phuong Binh dairy trading enterprise, herd size: 120 heads… The company has dairy farm in Tuyen Quang, Lam Dong, Thanh Hoa, Nghe An with a system of modern technical equipment - Fresh milk purchasing center has the role of buying raw milk materials from farmers and cow farms, weighing and measuring milk volume, checking milk quality, preserving and transporting it to the factory From the center can inform farmers about the quality, price and quantity demand of raw materials At the same time, the purchasing center will pay the cow farmers STEP 6: Order-routine specifications Compliance with a series of slot regulations Vinamilk has helped the herd of cows to be healthier, produce more milk quality and richer in nutrients To be safe to have a safe and secure money to make money When these standards are met, Vinamilk will proceed to set up orders and make payments STEP 7: Performance review In any era, at any time, the decisive factor to the survival of a brand is product quality Only when the product quality is good will the marketing campaigns be effective, and the product brand will be engraved in the minds of consumers Raw materials are an important factor in the process of producing quality products to customers To this, Vinamilk has created good relationships with suppliers, being proactive about raw materials (especially milk) in all aspects In the process of purchasing milk, all standards and commitments must be met in full and timely in quantity, with approval from the leadership When suppliers and importers trust each other and build long-term relationships, business activities of both sides will be more effective Together they can plan how to better understand the hidden desires of their customers and make accurate decisions at a reasonable cost The importer will find out the market demand, notify the supplier, the supplier will offer a "soft" price, more reasonable Thus, both sides benefit and achieve their goals CONCLUDE Up to now, Vinamilk's entire dairy industry is still leading the Vietnamese market with more than 50% market share In the past two years, Vinamilk's fresh milk export turnover has grown by 70% per year Vinamilk's products are present in more than 40 countries around the world, such as Cambodia, Thailand, Korea, Japan, China, Turkey, Russia, Canada, USA, Australia Good financial preparation and production capacity, initiative in the source material along with business and marketing strategies in accordance with the textualization and user orientation will be the basic factors that help Vinamilk to be created out the place to be effect of milk Vietnam at the school has the big size of the world