luận văn thạc sĩ xây DỰNG CHIẾN lược PHÁT TRIỂN sản PHẨM sơn NGOÀI TRỜI

LUẬN VĂN THẠC SĨ XÂY DỰNG CHIẾN LƯỢC PHÁT TRIỂN SẢN PHẨM SƠN NGOÀI TRỜI TO BUILD AN OUTSOURCING STRATEGY FOR SOME PRODUCTS AT AKZONOBEL PAINTS VIETNAM Capstone Project Report Page |1 INTRODUCTION Thesis title The reason for choosing this topic/background analysis The objective of the report Scope of study Study Methodology Significance of the report Report expectation The thesis structure CHAPTER I – THEORETICAL BASIS 1.1 Concepts, requirements and content of the Outsourcing strategy step process 1.2 Vision, mission and strategic goals of the Company 1.3 External environment analysis 1.3.1 Analysis of macro business environment (Pest) 1.3.2 Analysis of Industry environment as per Michael Porter (5 resources) 1.3.3 Analysis of competitive environment 1.4 Analysis of the enterprise environment 1.5 SWOT Matrix 1.6 Business strategy CHAPTER II – TO BUILD THE OUTSOURCING STRATEGY AT AKZONOBEL PAINTS VIET NAM (AKZONOBEL VN) 2.1 Overview of Akzonobel Paints Vietnam Ltd 2.1.1 About Akzonobel Paints Vietnam Ltd 2.1.2 The formation and development Capstone Project Report Page |2 2.1.3 Field of operations 2.1.4 The main products 2.1.5 Organizational Structure 2.2 Recent business performance 2.3 Mission, core value and strategic goals of Akzonobel Paints Vietnam Ltd 2.3.1 Mission 2.3.2 Core value 2.3.3 Strategic goals……………………………………………………………28 2.4 External environment analysis 2.4.1 Macro environment analysis for Akzonobel Paints Vietnam Ltd (Pest) 2.4.1.1 Economic environment impacts 2.4.1.2 Political and legal environment impacts 2.4.1.3 Cultural and social environment impacts 4.1.4 Demographical environment impacts 2.4.1.5 Technological environment impacts 2.4.2 Industry environment analysis of decorative paints (5 forces of Poster) 2.4.2.1 An analysis of potential rivals 2.4.2.2 An analysis of customer pressure 2.4.2.3 An analysis of potential alternate products 2.4.2.4 An analysis of supplier pressure 2.4.2.5 An analysis of potential rival pressure 2.5 Internal environment analysis of Akzonobel Paints Vietnam Ltd 2.5.1 An analysis of marketing competence 2.5.2 An analysis of management competence 2.5.3 An analysis of financial capability Capstone Project Report Page |3 2.5.4 An analysis of human resources 2.5.5 An analysis of employed technologies 2.5.6 An analysis of the communication system 2.6 SWOT analysis for Akzonobel Paints Vietnam Ltd 2.6.1 Strength 2.6.2 Weaknesses 2.6.3 Opportunities 2.6.4 Threat 2.7 Analysis for the Outsourcing strategy 2.8 Analysis for the choosing of products will be outsourced CHAPTER III – SOLUTIONS, RECOMMENDATION AND CONCLUSIONS 3.1 Building long term strategic objective 3.2 Solution for outsourcing strategic implementation 3.3 Proposals/Suggestions 3.4 Conclusion ANNEX LIST OF TABLES Table 1-1: SWOT matrix Table 2-1: Company production and revenue over the past few years Table 2-2: Company growth rate over the past few years Table 2-3: Population density in cities and mountainous areas Table 2-4: Population density by region Table 2-5: Formula of a paint product Table 2-6: Advertisement costs over the past few years Table 2-7: The group revenue in 2008 Table 2-8: Production of the factory in Binh Duong province Table 2-9: SWOT of Akzonobel Paints Vietnam Ltd Table 3-1: Sale records of the north Capstone Project Report Page |4 LIST OF FIGURES Figure 1-1: Steps in developing the strategy Figure 1-2: M Porter model of five forces Figure 1-3: Procedure for identifying sustainable competitiveness Figure 2-1: Company organizational chart Figure 2-2: Outsourcing division organizational chart Figure 2-3: Marketing division organizational chart Figure 2-4: Bath-based traditional paint production procedure Figure 2-5: IT division organizational chart LIST OF ABBREVIATIONS SWOT matrix: Strength, weakness, opportunities, threat Akzonbel Vietnam: Akzonobel Paints Vietnam Ltd EBITDA: Earning Before Interest, Taxes, Depreciation, and Amortization OWC: Operating Working Capital HSE&S: Health, Safety, Environment & Security Capstone Project Report Page |5 INTRODUCTION Thesis title: Development of an outsourcing strategy for some products at AkzoNobel Paints Vietnam Ltd The reason for choosing this topic/background analysis Based on the actual need and situation of AkzoNobel Paint Vietnam Co., Ltd.: • Limited supply to meet the market demand for paint and putty powder, particularly in the northern Vietnam where the company has no factory By using outsourcing services, the company shall be able to meet the customers demand at the soonest and reduce the cost transporting products from the south to the north given strongly increasing gasoline and electricity price recently • Product development strategy taken by the company and the AkzoNobel Global in general is prioritizing the development of environmentally friendly product lines Therefore, solvent bourn paints and putty powder shall not be prioritized by the company Thus, the outsourcing of these products would be appropriate and necessary for the time being From the above discussions, the company management has attached special importance to the assessment of feasibility and development of a detailed and comprehensive outsourcing strategy The objective of the report From the above requirement, the objective of this thesis is to study and develop an outsourcing strategy for some product lines by an external party Two main objectives of the thesis include: • To assess and evaluate the efficiency/feasibility of the outsourcing strategy • To develop a complete outsourcing strategy and apply it into reality Scope of study This is a highly practical study However, it only focuses on the company internal side • Study period: from 2010 to 2013 • Spatial boundary: AkzoNobel Paint Vietnam Co., Ltd Capstone Project Report Page |6 • Target groups of the study: Due to time constraint, the objective of the study and data and information availability is limited Therefore, the study only focuses on some key issues such as environmental macro-analysis, sector environmental analysis, and company internal environmental analysis, which serve as the basis for developing a complete outsourcing strategy for some product lines of the company Study methodology  Data and information collection - Primary data is collected by actual observations at the factory based in My Phuoc Industrial Park, Binh Duong province, interviews with the management and employees and workers, etc - Primary data is consolidated from the company reports and other references, including, books, newspapers, and reviews, etc  Data processing method - Comparison, analysis and consolidation: data from annual reports is compared, analyzed and consolidated to give comments - Statistics: to make inventory of tables and data to come to a conclusion and forecast possible trends to assess the company operations - Expert knowledge: to consult with experts involved in paint production industry - SWOT: is a technique to analyze and process the business operations by combining strengths and weaknesses, risk and opportunities to propose a proper strategy Significance of the report In the world, outsourcing is a trend which is currently used by many companies, particularly national corporations, namely Unilever, Nike, and Idemitsu, etc Therefore, the study of an outsourcing strategy for AkzoNobel Paint Vietnam Co., Ltd shall be of great significance It will help to reduce production cost, meet customer requirements in a prompt and most sufficient way (OTIF), and minimize some HSES related risks Capstone Project Report Page |7 Report expectation Given the time constraint, the thesis expectations are quite limited Group wishes to address the following issues: • To assess the effectiveness of the outsourcing strategy • To establish a detailed outsourcing model, covering the assessment of contractors and until the contract completion • To assess the contractors after outsourcing assignment Thesis structure Exclusive of the introduction and conclusion, the thesis is comprised of chapters: Chapter 1: Legal basis Chapter 2: To establish an outsourcing strategy for Akzonobel Paint Vietnam Co., Ltd Chapter 3: Solutions, recommendations and conclusion Capstone Project Report Page |8 CHAPTER I THEORETICAL BASIS 1.1 Concepts, requirements and content of the Outsourcing strategy step process Any company/organization shall need a proper business strategy This is a step towards establishing sub-strategies which shall all serve that company/organization business strategy And the “product outsourcing by an external party” shall not be an exception  Definition: There are many definitions of “business strategy” Nevertheless, the term “business strategy” has been commonly used and accessed by different scholars Business strategy is considered as an art or a kind of planning (like Alain Threalart, G Arlleret, and D Bizrell, etc.) However, one definition that has received a lot of agreement is: “Business strategy is a collection of objectives and policies and plans which are set to obtain the above said objectives, and clearly reflect what business the company is and shall be doing and in what business areas”  Strategy level The strategy is planned at various levels, yet, it still has a close interlink The strategies of different divisions shall differ from each other, but sharing one goal of serving the company/organization overall strategy In any organization, strategies exist at various levels – covering the whole organization (or a group of enterprises) and even individuals working inside it Company strategy: is the strategy that mentions the whole company Company strategy largely talks about its list of products and diversifications of these products in order to take full advantage of the company spearheads In other word, the company strategy question would go like: “In what aspect should an organization compete?” Business strategy: or the so-called product strategy or competition strategy because an enterprise would compete in the market in with regards to individual product only Business strategy for each product type needs to answer such questions as: What are the objectives to be achieved? What is the competitiveness needed to obtain such objectives? Who are potential key rivals? Central to a business strategy is to identify and enhance organization competitiveness in the concerned market Capstone Project Report Page |9 Functional strategy: Functional strategies such as marketing, finance and human resources management, etc need to be combined to enhance competitiveness for the business strategy The key point of functional strategies is to specify value added that can be given to customers as well to strategies at higher levels Global strategy (international business): is the choice of heading towards international business issues when a company is to diversify and upholder its operations to outside the country  Major characteristics of a business strategy Business strategy specifies basic objectives and operation directions of an organization over a specific time period The strategy orientation functionality shall help an organization to continuously develop and stand firm in its fluctuating business environment Business strategy shall ensure the maximum mobilization and combination of the exploitation and utilization of organization available and future resources, making use of advantages and opportunities in its competition race An organization business strategy is reflected in a closed and continuous process Business strategy tends to be moving forwards and winning in any business playground Business strategy is often built up within a long time period (3, 5, or 10 years)  Business strategy role Business strategy helps an enterprise to be aware of its objectives and orientations, which function as a guide to its production and operation activities Business strategy helps an enterprise to capture and take advantage of business opportunities and at the same time take necessary actions to overcome any threats and/or risks in the market Business strategy contributes to improving the efficiency of resources utilization, enhancing company competitiveness and ensures its sustainable business and operational development Business strategy creates firm bases for policy makers to issue policies and decisions in a timely accordance with the market situation  Strategy development procedure Capstone Project Report P a g e | 10 S2: Possess strong Market development trademarks strategy (S1, S2, S3, S4, S5, strategy (S1, S2, S3, S5, S6, S3: Have good position in S8 + O1, O2, O3, O4: Product development S8 + T4, T5: Develop the market; be entrusted Expand the market, increase products suitable with the with by foreign partners market share by improving market demand and gain S4: Have negotiation quality and response to competitive edge against experience customer needs rivals) S5: Have high Product development management competence strategy (S1, S3, S5, S6, S7, S6: Employ advanced S8 + O1, O2, O4,: Dominate technologies the market by differentiating S7: Highly its products) qualified/skilled human resources S8: Powerful financial capability Weakness (W) Strategy W-O: Address Strategy W-T: W1: High freight for weaknesses by taking Minimize weaknesses and transportation from the advantage of opportunities prvent threats south to the north Self-refine to develop W2: Higher production market (W1, W2, W3 + O1, (W2, W3, W4+T1, T3, T4: cost than similar O2, O3, O4: Improve Self-refine to develop Improve service quality, producers in the industry system, Take advantage of responses to customers, and W3: Response to opportunities to address minimize threats to dominate customers in the north weaknesses and find the market) remains slow development opportunities) W4: There exist some conflicts between market development strategy and market demand for some product lines Capstone Project Report P a g e | 44 2.7 Analysis for the outsourcing strategy As analyzed in the SWOT matrix, the choice of “Market development strategy” by improving quality, services and responses to customers The pursuit of the “Outsourcing of some product lines” is a correct choice in the present context Advantages:  Delay and difficulties in meeting the market demand in the north due to transportation distance Road transportation takes less time (approximately days) but costly, thus resulting in higher product price Shipping costs less but takes more time and relies mainly on weather condition Therefore, by outsourcing some products in the north, the response to customer needs shall be significantly improved  Product development strategy of Akzonobel group in general and of Akzonobel Paints Vietnam Ltd in particular is to prioritize developing environmentally friendly products Therefore, there is a conflict between the company product development strategy and responses to the market demand in such products as oilbased paint and putty powder Capstone Project Report P a g e | 45  Surveys indicate that production costs at outsourcing partners are lower than in the company This is a good opportunity for the company to increae profit and enhances its competitive edge in the market  Given the company production in the north of about million liters/year outsourcing is an appropriate strategy This is more cost efficient than transporting products from the south to the north or building a factory in the north Disadvantages and solutions:  The biggest disadvantage is to ensure product QC at outsourcing partners because product quality then depends on technologies, human resources and management competence of the partners To address these issues, the company needs to support its outsourcing partners in upgrading and improving technologies At the same time, it needs to schedule the evaluation of the partners in order to timely observe any non-conformances At least once a year, the evaluations of HSES and Quality is necessary  Difficulties in communications between the two parties This can be addressed by establishing effective communication channels between the two parties  Risk of disclosing technological know-how To prevent this, the company needs to provide detailed terms and conditions in the outsourcing contracts and tactics to avoid the disclosure of technological know-how 2.8 Analysis for the choosing of products to be outsourced As mentioned above, outsourced products shall meet the following criteria:  Products that are not in the company development strategy still need to satisfy traditional customer needs  Products, the demand for which is increasing in the north  Middle class products Capstone Project Report P a g e | 46 From the above discussion, I would like to propose the list of products to be outsourced:  Maxilite Interior (white & color)  Maxilte Exterior (white & color)  Dulux Interior Primer  Dulux Whethershield Sealer  Dulux Putty  Maxilite Putty  Maxilite oil based paint  Dulux oil based paint Capstone Project Report P a g e | 47 CHAPTER III SOLUTION, RECOMMENDATION AND CONSLUSION 3.1 Building long term strategic objective As mentioned above, the paint production industry growth reaches from 15% to 20% and the market demand in the north as below: Table 3-1: Production volume in the North Year Volume (ML/A) 2008 2009 2010 4.7 5.5 6.6 2011 2012 2013 (expected) (expected) (expected) 10 12 (Source: Company internal reports) From now until 2013, the outsourcing strategy will still work for the company Nevertheless, after 2013, given present day development pace of the paint production industry, the market demand in the north would reach approximately 15 ML/year Then it is necessary to consider building a factory in the north In conclusion, from now until 2013, the question is how to develop such an outsourcing strategy and where to start? 3.2 Solutions for outsourcing strategy implementation Below are the steps needed to implement the outsourcing strategy: Step 1: Choice of outsourcing partner First, it is necessary to find a potential partner that can best meet the company requirements To so, the company has to conduct surveys into paint producers in the Capstone Project Report P a g e | 48 north A list of candidate outsourcing partners shall be developed to see any of them is able to cooperate with AkzoNobel or not? Next, the company has to evaluate their production competence to choose out the best outsourcing partner Such evaluation shall be conducted by the company experts or senior leaders The tool used for such evaluation may be in the form of questionnaire/check list This check-list shall focus on:  Financial capability  Human resource quality  Machinery and equipment  Quality management system  HSES  Production management competence  Labor management policies Performance assessment based on the collected check-lists shall accurately evidence competence of an outsourcing partner After evaluation and choice of a proper outsourcing partner, it is necessary to negotiate and conclude an outsourcing contract Step 2: Outsourcing partner management The next step after the choice of a proper outsourcing partner is contract negotiation and conclusion The contract shall be negotiated as such to ensure it is mutually beneficial The contract needs to provide strict terms and conditions with regards to nodisclosure of technological know-how, response to customers, etc Capstone Project Report P a g e | 49 The management of the selected outsourcing partner is critical The company has to identify a proper ways of managing such partner The management focuses on:  Identifying responsibilities of each department and/or individuals  Management of material, packing, and final products  Product quality control at the outsourcing partner premise  Production guidance  Control of machinery and equipment at the outsourcing partner premise  Industrial hygiene control  Annual evaluation of the outsourcing partners with regards to HSES and Quality conformance Once a year, the company shall revaluate the outsourcing partners with regards to HSES and quality management system conformance, etc in order to observe any nonconformance and proposed timely potential improvements Step 3: Establishment of an interactive model between the two parties Clearly indentify contact points for the two parties so that non-conformances can be detected and addressed at the soonest Such interactive model is aimed at:  Ensuring smooth communications between the two parties  Informing about product needs  Informing about material and final product delivery  Facilitating quick discussions between the two parties about technical issues and product quality  Discussing about contract and mode of payment Capstone Project Report P a g e | 50 Step 4: Management and monitoring of outsourcing This is the last but very important step to the success of the strategy The majority of paint producers in Vietnam are joint stock companies; therefore, they have limited management competence and production control skills At the same time, they not have the habit of sustaining product QC as conformance to HSE&S Within the paint production industry, the management of outsourcing needs to focus on:  Product quality management: o Quality record o Batch treatment o Out of Specification o FROK  HSE&S: o Annual Supplier Visit o HSSE case review  Production control: o ABS o Productivity o Yeild-Loss Capstone Project Report P a g e | 51 o PPP The evaluation, choice, management, communications and management/monitoring of the outsourcing partner need to be generalized as below: Figure 3-1: Outsourcing model 3.3 Proposals/Suggestions To successful implement the “Market development – Outsourcing strategy”, there needs to be support from different relevant local authorities and the company management  With the government Issue proper tax policies: Currently, paint is mainly used for local purpose To promote the export of paint products, the state needs to issue proper tax policies to encourage producers to follow this direction Reduce market instabilities with regards to some sensitive products such as gasoline, electricity and coal Capstone Project Report P a g e | 52 Human resources need to be trained sufficiently because skilled labor force for paint production industry remains inadequate Therefore, there needs to be more support from the state in this aspect  With the industry Organize annual seminars for Vietnam Paint Association This is an opportunity for paint producers to share experience and look for support from other members It is necessary to have consensus on protective measures for the association members and the development of Vietnam paint production industry Study and apply study results, scientific and technological advancements into real production Support in providing information about the paint production industry to all members  From the company management Support, recruit high quality human resources for the outsourcing department Provide sufficient financial support Provide necessary support, with regards to equipment and management experience for outsourcing partners, particularly during initial cooperation phase Encourage the establishment of cooperation links among company departments and the outsourcing department Provide outsourcing partners with necessary training about production techniques, quality management, and industrial safely and hygiene Establish a concrete road map for developing the outsourcing strategy 3.4 Conclusion Capstone Project Report P a g e | 53 As mentioned above, as part of the product marketing strategy, outsourcing has been increasingly employed by many companies or groups in the world as a way to promote their products Advantages of this method include:  Do not need to make a significant investment into building premises  Do not need to spend too much time for management work  Minimize risks related to HES&S  Lower production cost in some cases In face of present day fierce competitive environment, the orientation of a business strategy for a company is very fundamental to its development and prosperity As a paint provider in the local market, Akzonobel Paints Vietnam Ltd is looking forwards to further development and success and future We have applied knowledge learnt from the Program and practical experience to conduct an assessment of both internal and external business environment in order to set out market development strategies by implementing the Outsourcing strategy, which is assessed as in accordance with the company development over the period 2010-2013 The thesis has addressed the following issues:  A set of methodologies about issues related to business strategy  Reflected the business and operation of Akzonobel Paints Vietnam Ltd., thereby assessing strengths and weaknesses of Akzonobel Paints Vietnam Ltd  Indicated factors that impact the business of Akzonobel Paints Vietnam Ltd thereby identifying opportunities and challenges  Proposed an outsourcing strategy for the company until 2013 and implementation measures Due to time constraints and knowledge limit, we have tried our best to consolidate basic methodological issues as well as the application of the business strategy of the company, shortcomings is inevitable and I would welcome any comments from readers Capstone Project Report P a g e | 54 REFERENCE: Fredr David (2006), “Concepts of Strategic Management”, Statistics Publishing House Akzonobel Internal Document (2010), “Management Essential Program” Fred R David (2009), “Strategic Management – Concepts and Cases, 12th Edition” NXB Pearson Education Associate Professor, Doctor Le The Gioi; Doctor Nguyen Thanh Liem (2009), “Strategic management”, Statistics Publishing House Doctor Nghiem Si Thuong (2010), “Finance management basis”, Vietnam Education Publishing House Charles D Schewe – Alexander Watson Hiam (2009), “The Portable MBA In Marketing”, Ho Chi Minh City General Publishing House Associate Professor, Doctor Le The Gioi – Doctor Nguyen Thanh Liem – Master Tran Huu Hai (2009), “Strategic management”, Statistics Publishing House Doctor Pham Van Duoc – Dang Kim Cuong (1999), “Business operation analysis”, Statistics Publishing House Nguyen Vinh Thanh (2005), “Enhancing competitiveness”, Hanoi Labor - Social Publishing House 10 Associate Professor, Doctor Nguyen Thi Lien Diep, Master Pham Van Nam (2006), “Business Strategy and Policy”, Labor – Social Publishing House 11 Nguyen Thanh Do (1996), “Enterprise development strategy and plan”, Education Publishing House 12 Statistical data provided by the General Statistics Office and Vietnam Paint and Ink Association 13 Internal reports and business data of Akzonobel Paints Vietnam Ltd./Akzonobel Group over the past few years ANNEX Annex 1: Proposed process of Planning and Production Capstone Project Report P a g e | 55 Alzonobel Paints Vietnam Ltd Process : Planning and Production Toll Manufacturer : Planning Toller Logistic Production/ Outsourcing Start Send monthly rolling Demand Forecast (1) & Weekly Production Schedule (2) Adjust Plan Check No Send Adjusting Plan Proposal (3) Take Note in Supply Confirmation Issue Shop Order accordingly Yes WH preparation Confirmation Scan Shop Order (Excel form) to Production Issue Shop Order from Excel file Receiving/ Confirmation Close Shop Order in the BPCS system Production Attached Excel form with Shop Order issued from BPCS system and issue RM / Update FG in Toller warehouse in the BPCS system Transfer received stock from Toller WH to FGWH in the BPCS system Delivery Record in Monthly Report End Notes: (1) : Demand Forecast : - Rolling monthly forecast demand update on the 25th working day of the month and reconfirm on the 8st working day of next month - Include : (i) last update demand of current month (ii) forecast demand of next two months - Demand Forecast will be (i) adjustable previous update (subjective to availability of materials) - Demand forecast will be at total volume (2) : Weekly Production Schedule : - ICI will update Toller, on Thursday weekly, Production Schedule of next week - Production schedule will include specific : quantity (by SKUs level), manufacturing date, based on Production Schedule which has being applied in HCMC (3) : Adjusting Plan Proposal : - Toller is requested to send a "Adjusting Plan Proposal" once find out a "supply constraint" versus ICI demand - Adjusting Plan Proposal should include : (i) clear reasons for supply constraint (ii) propose adjusted plan to satisfy demand Capstone Project Report P a g e | 56 Annex 2: Proposed process of Quality management at outsourcing partners premise Akzonobel paints Vietnam Ltd Process : Technical & Quality Assurance/ Quality Control Toll Manufacturer : Toller Start Quality Monthly Report Procedure & Process review End QA/QC Normal Operation Toller Start Analyse and Record Giving Guidance (if necessary) QA/QC NCR Operation Send NCR Collect & Send related Data records Check/ Analyse No Correction Guidance for Corrective Actions Yes Send Final Test Results Capstone Project Report Check and Confirm P a g e | 57 Technical History Record Akzonobel paints Vietnam Ltd Process : Technical & Quality Assurance/ Quality Control Toll Manufacturer : Toller Start Quality Monthly Report Procedure & Process review End QA/QC Normal Operation Toller Start Analyse and Record Giving Guidance (if necessary) QA/QC NCR Operation Send NCR Collect & Send related Data records Check/ Analyse No Correction Guidance for Corrective Actions Yes Send Final Test Results Check and Confirm Technical History Record End Capstone Project Report P a g e | 58