MBAVB2
NGO KIM DUNG
ENHANCING CUSTOMER RELATIONSHIP MANAGEMENT
AT CADIVI CORPORATION
MASTER PROJECT
MASTER IN BUSINESS ADMINISTRATION (PART-TIME)
Tutor’s name: Dr NGUYEN THI MAI TRANG
Trang 2I would like to give thanks to the following people for the help and support in the completion of this study
First and foremost I would like to give great thanks the Board of Rector of Vietnam and Belgium Joint-Venture Master Program, Solvay Brussels School and Hochiminh City Open University Special appreciation to Dr Tran Anh Tuan, Dr Nguyen Minh Kieu, Professor Jean-Pierre Baeyens and Professor Daniel Van Houtte, who have organized the favourable program and transferred valuable knowledge and experience to our Vietnamese students Many thank to Ms Bui Bao Tran and Mr Serge Bywalsky for every effort giving the most convenience to our class of MBAVB2
Special thanks to my tutor, Dr Nguyen Thi Mai Trang, for her enthusiastic, valuable comments and guidance throughout the writing of this project
High appreciation to Mr Nguyen Loc, MBA - Deputy Director of Cadivi Corp., who has facilitated me accessing to the company’s data and conducting a comprehensive survey in order to achieve the accuracy as well as the valuation in this study
Trang 3at CADIVI CORPORATION
_ The topic is interesting and applicable to Cadivi Corporation Ngo Kim Dung has proven her mastery of doing a business project She contacted me ‘regularly to receive my comments on her project J am quite satisfied with her work For that reason, I am writing to certify that this project meets the requirement for a business project at the master’s level It is recommended that Ngo Kim Dung present her business project to the Committee
Hochiminh City, February 25", 2010
C—O
Tutor’s signature
Trang 4TABLE OF CONTENTS
EXECUTIVE SUMMARY -222222222.221 1 mmrrrrrrrr 1
INTRODUCTION TO THE FINAL PROJECT .ccecccceseseneeseeeesaseesenstectenseeasees 2
Rational of the sfUỦy 6-55 n9 031188 11 1n 0 1 Hàn 0101 1 Hee 2
Statement of the problem dddŸÝẮĂẮồ ƠỎ 3
Study objectives — .Ơ 3
Scope of the study "= ƠỎ 3 Methodo]OBV 5 < 1+ 4 ng 92117101 n1 11 1010111111411." 3 Nnit0nir.f0äini.S5 ri 00177 ố.ố 4 CHAPTER 1 - THEORETICAL FERAMEWORK eeneeeiiee 5 1.1 CRM defnition - — 6 0:9 00a 6 1o .ƠỎ 7 1.3.1 Operational CRÌM +x+xskeh trình 0001001010010 100100 7 1.3.1 Analytical CRM c2 2t221202122112121 11.1 mrrreer 7 6i so Tin _ 7 1.4 CRM architeCfUT -cs+âcszcrtrrtrrrrrrrtrrrrrrrrrrerrre ơ Th 7 1.4.1 The peOpÌ€ 5c 2à sọ HH 00101011010101141112100170111111 7
1.4.2 The process ¬— ƠƠƠƠƠÐ 8
1.4.3 The technỊ - «set teen C191 11111 1151311311115 111121125 §
1.5 CRM crifical sSuCC€SS ÍAC†OFS - 5 SÁT TH g1 01 g1 010 1 H0 TH 1001 0g 8
Trang 5PA xui toc na 14
2.1.3 CADIVI’s CuÏftIFE c5 ccs tr 1111111111 errirrg 15 2.1.4 Markets and CUStOMES 2 ccsccsscesssescssnccenseeesessccsscesseseseseeeeesessssseseessesseesass 16 2.2 Market share and ørOwWwth TAẲ€ - á- co HH HT HH ng gàng ng 16 2.2.1 Market Shares .ssssssssssesssessesssssssssnessnsssneesnossnsssnesssssscsnesssnessnesnecsnrensesssessnees 16 "Cĩ An v.v 17 2.3 Distribution channi€Ì - -< «s9 v9 3091 1 0 Hà 9á 9g 010100 1 g1 18 2.4 First level distributor of CAIDTVI 22+ ©cs©c<czsEEkeEkEkEEkrkerkerkereecsee 19 2.4.1 First level đistributors ccccccee H Ơ 19 2.4.2 First level dIstrIDufOT TI€€S <5 SH HH ng g6 081888 74 19 CHAPTER 3 —- SETUA TION ANAL,YSIS -Á SH HH HH 111811811 811 sec 21 3.1 External arnaÌWSÏS s- << TH họ nọ TH TH TH HT 7e 22 3.1.1 Political and legal nh 22 3.1.2 EconomIC ÍäCÍOTS - sọ TT TT ngờ 22 3.1.3 Social factors ố 23 3.1.4 Technological factors na S23 khien 23 EV0060i 0080 TT 23 3.2.1 Practices of CADIVI’s implementing CRM -« H48 115181 sex 24 Ễ©\ 003i 25 3.3 Finding from the SUIVECY :ccsccssesseseecsessssensecesnenscescsntensesseeeeenesenessessesenes v41 se 27 EE6nn©9 oca an ố 28 3.3.2 II 6iJ0 an 31 EENNsovooegooo 0n 36 E900 39 E9 40 CHAPTER 4 - RECOMMEDATION ơ 41 .â (0v 00 6 ố 42 4.1 Solution 1: Fixing unreasonable points of current CRÌM -cssss<csseexee 42 CN c8 o nnn 42
4.1.2 Customer saftisfaction def€TTnITIAfTOT - se se 991 91xEeekererkrkrirrkree 42
Trang 64.2 Solution 3: Building customer loyalty Don .cceseeereeeteeeneenesetsenenecsseteesenes 43 4.2.1 Build customer profile c ccccssessedeccescesseesessessessssesssssesnessssssesseescensenennenseneens 43, 4.2.2 Drive the best force to support currenf distribUufOTS ‹ <<-<-<<e+ 45
4.2.3 Launching loyalty and reward pTOBraimme -«- -+s series 46
4.3 Solution 3: Upgrading customer service and prOdUCf -«e-eeerseeereerrer 48 4.3.1 Shorten delivery tiime -ereeeereerterrererrrriirriiiirierrrrirei Test 48
4.3.2 Re-form customer complaint handÌing - - «5s sen 48
_4.3.3 Improve customer comrmmuniCafiOI . + sesssc+srseettetsersrieeirrirrrie 52 4.3.4 Enhance employee’s knowledge and skills -: - " 53 4.3.5 DiVersifYy DTOUC - 5 52+ s10 11 HH H101000131111101111110101P 54
B — Feasibility amalysis .sssscssssssssssssssseresesesesseneesseneceneseesesssssoesssesenssnessrsseseneaes 55
4.1 Cost — EÍf€CtÏV€TISS SÁT 100101 0001 0n 000 10730 55
4.2 Human resource — Effectiveness sssssssssssssssssssssssscssssccssssssseceessneseceesuseccessnseeessses 58
4.3 Time — EÍf€ctiVeness . -cc series S900 1110110 in t0 58 n@ o0): 6 na e 58 l@9)/9 00/3/9025 59 APPENDICES REFERENCES APPENDICES: Appendix 1 — Questionnaires
Appendix 2 — Survey results
Trang 7Table 1-1 Table 3-1 Table 3-2 Table 3-3 Table 3-4 Table 3-5 Table 3-6 Table 3-7 Table 3-8 Table 3-9 Figure 2-1 _ Figure 2-2 | Figure 2-3 Figure 2-4 Figure 2-5 Figure 3-1 Figure 3-2 Figure 3-3 Figure 3-4 Figure 3-5 Figure 3-6 Figure 3-7 Figure 3-8 Figure 3-9 Figure 3-10 Figure 3-11
: CRM performance effectiveness frame of refererice -ceererreeere 9 : Satisfaction on delivery time ssecesssceeerseersereereesssesseesenresenntees tra ¬ 29
: Satisfaction on payment f€rm . « che 30
: Satisfaction on customer complaint handling -+ersesesrseserer 32 : Satisfaction on customer inquiry responding — 33 : Satisfaction on information updating -cseeeeeeeesrsrerrriirieire 34 : Satisfaction on sales representative’s knowÏedge «-«-eeerreeerersrere 35 : Satisfaction on CADIVI’s product overaÏÏ -sseseesersrrrrrrrrrrrre 36 : Satisfaction on product feafUT€S -ccscerrserrrereerrrrriirriiiriiirreriie 37 : SWOTT analÌySIS . -s<=<ee+ TH ntnnrnnnnttrrittrr 39 : Comparison of market share of domestic civil electric wire and cable (%) 16 : Comparison of CADIVI”s growth rate (2%) -eereeeeerrrerrierrrrrrerie 17 : Sales by customer groups (Million USÌD) -eceeceeerreeirrrerrrrrree 17 : The percentage of sales by customer groups in 2008 (%) <« 18
: CADIVI's distribution channelÌ . + ++- + 5s ‡vt tri 19
: The number of distributors in lates( Š y€AFS «<< sen 25
: The percentage of changing purchase SỈZ€ -. -c-ecssneeeeeeerrerrterrereree 26
: Satisfaction on CustOrmer S€TVỈC€ - 5 55+ n9 set 28
: Satisfaction on delivery tÏm€ - - series 29
: Satisfaction on payment f€rm - «+ +s+serettrtrertrsrersrrrrririrrerre 30
: Satisfaction on sales represenfafÏV€ - «sen 31 : Satisfaction on customer complaint handling . -e+-+-+sereeetstrsee 32 : Satisfaction on customer inguiry responding -. -«seeerrestrrrrrsrirmr 34
: Satisfaction on information updatIng - - se seneeeeererirerrirrrrrrre 35
Trang 8AS _ : Australian standards
ASTM: American Society for Testing and Materials B2B _ : Business to Business
BS : British Standards
CADIVI: Vietnam Electrical Wires and Cables Corporation CRM_: Customer Relationship Management
DIN | : German Institute for Standardization FIFO: First-In First-Out
FTA :A marketing research and consultant company GDP _ : Gross domestic product
GSO : General statistics office
IEC _ : International Electro-technical Commission
IT : Information Technology
ISO _ : International Organization of Standardization
ISO 14000: An international standard that guides companies in managing their risks and
potential impacts to the environment along with assessing
ISO 9000: An international standard that provides guidance in the development and implementation of an effective quality management system
JIS: Japanese Industrial Standards
PEST : Political — Economic — Social ~ Technological environment analysis SWOT: Strengths — Weaknesses — Opportunities — Threads
Trang 9EXECUTIVE SUMMARY
In order to increasing sales, many companies spend money on marketing activities As a result, they win a lot of customers and partners They keep creating costly marketing plans every month A year later, those companies realize that major of their sales come from new
customers, and they wonder what happen to old customers and where customers go There
are many reasons that a customer or client may leave a company, in which the following reasons are more often: price is too high or unfair, complaints are not solved, competitors offer is more attracting, and customer think company does not care about them
In fact, turnover can go further if company focuses their resources on building, nurturing, and developing the customer relationship Building this relationship means treating customers and clients as if they truly are partners and showing them that company truly cares about them It is important to try to satisfy customers with the right products and services, supported by the right promotion activities and provide available products and services at the right time and location
CADIVI is a joint-stock company that specializes in producing and supplying electric wires and cables Staying in B2B field, CADIVI realizes the importance of customer relationship and establishment Customer Relationship Management strategy However, their CRM exposed unreasonable points after implementing few months Company cannot satisfy their distributors completely, and loyalty of distributors has the trend to decrease The purpose of this study is helping CADIVI discover where their problems come from, and suggesting a sound solution
By using CADIVI’s sales reports of 2009 and survey, this study identified the situation of customer relation, and details of its problem This also brought a three—solution project which was based on establishing an effective communication channel — Customer Service Centre This tool will cost approximately US$ 2,500 however it makes the project
Trang 10INTRODUCTION TO THE FINAL PROJECT
A—RATIONALE OF STUDY
The business of electric wires and cables is one of the most attractive fields in Vietnam It
has an impressive growth rate while quite competitive As a developing country, Vietnam has high GDP growth around 8% annually which is greatly contributed by the electric equipment industry with the growth rate of 16.8 to 23.7% during 2005-2007 In the downturn of the world economy since the middle of 2008, though the growth of Vietnam GDP decreased to 6.23%, the growth of electrical equipment industry was 8.3% This showed the attractiveness of electric wires and cables business in Vietnam
On the competition aspect, many new electric wires and cables companies have invested
and expanded their business in this area There are about 100 cable companies, which causes harsh competition in this market
Vietnam Electric Wire and Cable Corporation (CADIVI) was established in 1975 as a state-owned enterprise which specialized in manufacturing of electric wires and cables In September 2007, in accordance with government’s policy on equitization, CADIVI changed their business to a joint-stock company They entered the market economy without any subsidy from the government by then Hence, company has faced both internal and external challenges from the organization, shareholders, and market '
CADIVI achieved impressive results with the growth up to 32% in 2007, in which distributor group contributed a significant portion of 67% However, it was fallen to 8.94%
in 2008, and 5% only as report of the first three quarters of 2009 Further, a negative signal has been found in the revenue growth of distributors group It declined from 50% in 2006- 2007, to 18% in 2008 and 7% in 2009 These results were badly down in comparing to
itself and electrical equipment industry B —-STATEMENT OF PROBLEM
Having become a joint-stock company since 2007, CADIVI has been aware the importance of customer relationship and put an effort on building relationship with their distributors
However, as a state-owned organization for many years CADIVI has slowly adapted to
building and improving the customer relationship, especially with their distributors While
Trang 11key issue Customer lost in 2009 was very serious The number of distributors was shrunk from 185 in 2008 to 165 in 2009 whereas it continuously increased during the period 2005- 2008 Some distributors left CADIVI and others decreased the purchasing volume, refused to buy again, and started looking for competitors’ information This shows that customer loyalty level of distributor was relatively low
C ~ STUDY OBJECTIVES
The objectives of this project are (a) to review the practices of implementing CRM to find out the unreasonable points, (b) to evaluate the level of customer loyalty, c) identify which elements are low satisfied in first-level distributors’ perception, and (c) to propose solutions to enhance the customer relationship management for CADIVI
D —- SCOPE OF STUDY
The project focuses on first level distributors in three key cities including Hochiminh city,
Hanoi, and Danang The proposal will be presented for the period from 2010 to 2015 - E-METHODOLOGY
The methodology has been used are combinations of secondary data and surveys Secondary data:
The data has been collected via desk research and interview with CADIVI’s managers Many reports of CADIVI, government associations (the General Statistical Office in Hochiminh city), and independent research institutions (FTA) were explored as secondary data The information about the company with its products, services, business results, the
number of customers and their purchase orders were obtained
Survey:
Trang 12F - STRUCTURE OF THE PROJECT:
Chapter 1: Theoretical framework
The aim of this chapter is to provide the insight to the study area as well as review of relevant literature in the area related to the project First, this chapter will present about customer relationship management (CRM) including CRM definition, CRM benefits, CRM system, CRM categories, and important factors for a successful CRM Then it will discuss other aspects of CRM such as customer satisfaction, customer loyalty, and
handling customer complaint
Chapter 2: Overview of CADIVI Corp
This chapter will represent general information about CADIVI CORP such as products, services, culture, market share, growth rate, customers, and distribution channel Especially the part of introduction to first level distributors and their needs will give a clearer picture about focused customer in this proj ect
Chapter 3: Situation analysis
This chapter will describe and analyze the current situation in concerned to the external
environment, and findings from the study and survey The external environment factors are political, legal, economic, and technical The survey is about customer satisfaction loyalty which is related aspects of CRM
Chapter 4: Recommendations
According to the identified problems in the previous chapter, this chapter will propose three effective solutions, including fixing unreasonable implementing CRM, building customer loyalty bond, and improving customer services and products Then analyse the
Trang 14The aim of this chapter is to provide the review of relevant literature in the area related to the project
1.1 CRM DEFINITION
Customer Relationship Management is a comprehensive approach for creating, maintaining, and expanding customer relationship (Anderson & Kerr, 2002) It is “comprehensive” because CRM does not belong to sales and marketing It is neither the sole responsibility of the customer service group nor information technology team In fact, CRM must be a way of doing business that touches all areas in the organization The
second key word is “approach” It means that CRM is a way of thinking about and dealing
with customer relationships ”Creating, maintaining, and expanding customer relationships” are about entire customer cycle
On the other hand, CRM is strategic approach concerned with creating improved
shareholder value through the development of appropriate relationships with key customers and key segments CRM unites the potential of IT and relationship marketing
strategies to delivery profitable, long — term relationships (Payne, 2002)
1.2 CRM OBJECTIVES
CRM objectives have been defined by several authors as below:
% To increased revenue, improve global forecast and pipeline management, improve win probability, reduce cost of sales, increase sales representative productivity, and promote sales representative retention (Greenberg, 2001)
+% To increase business opportunities by: improving the process to communication with the right customers, providing the right offer for each customer, providing the right offer through the right channel for each customer, and providing the right offer at the right time for each customer (Wilson et al.,2002)
“& According to Ryals and Knox (2001), the CRM objectives for service applications are: service reduces costs and increases profitability, service improves service
delivery, service helps organizations to delight customers, and service helps
Trang 154 Objectives by Kim, Suh and Hwang: Kim et al (2003) for categories of objectives for CRM: customer knowledge, customer interaction, customer value, and customer satisfaction
1.3 CRM TYPOLOGY
The Customer relationship management are categorized into three groups; operational
CRM, and analytical CRM and collaborative CRM (Reynolds, 2002) Each plays an
important role in customer relationship management, and a company that wants to success
must understand the importance of using these three components successfully 1.3.1 Operational CRM:
Operational CRM provides automated support to "front office" business processes (sales,
marketing, and service) Each interaction with a customer is generally added to a
customer's history, and staff can retrieve information on customers from the database as
necessary
~The automation or support of business processes involving sales or service representatives
1.3.2 Analytical CRM:
Analytical CRM analyses data (gathered as part of operational CRM, or from other
sources) in an attempt to identify means to enhance a company's relationship with its
clients
1.3.3 Collaborative CRM:
Collaborative CRM focuses on the interaction with customers (personal interaction, letter,
fax, phone, Internet, web, e-mail etc.) (Kracklauer et al., 2004)
1.4 CRM ARCHITECTURE
The success of any CRM implementation requires the seamless integration of three crucial
components: the people, process and technology used to touch the customer from any
point in the organization (Goldenberge, 2008)
1.4.1 The people: ˆ
Of the three, the people component can present the greatest challenge given the sensitivity
of users to change CRM systems, which support and automate the customer processes,
Trang 16understand the point of these changes will be adverse to the change So, gaining people
support early on will be important factor in the ultimate success of CRM initiative, so be
sure to address the people issue at first priority 1.4.2 The process: ©
The firm considers the “process” component of CRM to be the most delicate of the issues
because the inappropriate use of automation will be only speed up errant procésses While many organizations have customer—facing business processes (e.g some processes that directly interface with the customer during the purchase, payment and usage the company’s products and services), their business process need to be updated or even replaced
1.4.3 The technology:
All too often, the “technology” component is disproportionate emphasis, sometimes to the detriment of the overall project There are two issues related to technology: dealing with software vendors and staying on top of technology trend
1.5 CRM CRITICAL SUCCESS FACTORS
“ Establish measurable business goals
It is critically important to define the specific business benefits that company expect CRM
project to deliver Many projects fail because they did not identify specific goals for their
business The company has to clarify exactly what they are trying to achieve with their CRM strategy Are they trying to increase average revenue per sale? Improve customer retention and loyalty rates? Lower customer acquisition costs? Improve forecast accuracy?
Improve customer response times? Improve sales close rates? The company must prioritize
what they want to accomplish and select the CRM technology accordingly +k Organization commitment
The implementation of a CRM project involves everyone in the organization The commitment comes from the understanding the benefits of CMR For example, if sales force does not sell on completely the system's benefits, they may not input the kind of demographic data that are essential to the program's success
% Strong customer database
Trang 17many functions There are both operational and analytical components to this customer
knowledge base Operational activities create and store new information about each experience with a customer Analytic activities use this information to analyze trends, measure progress, and determine new courses of action
*& Customer service
Customer service is a series of activities designed to enhance the level of customer satisfaction — that is, the feeling that a product or service has met the customer expectation
Good customer service is the lifeblood and the most effective tool of CRM plan Excellent
customer service is an integral part of CRM No company can contemplate implementing CRM if it does not offer excellent customer service
(Foss, 2002)
1.6 CRM PERFORMANCE EFFECTIVENESS EVALUATION
1.6.1 References for metrics of CRM effectiveness |
According different authors, the factors could be used to measure the performance
Trang 181.6.2 Customer loyalty
Customer loyalty can be defined as the totality of feelings and perception of satisfaction, or positive attitudes and particular preferences for the company
It is more than having customer making repeat purchases, and being satisfied with their experiences on product or services they purchased Being loyalty, customers are committed to purchase products or services from a specific organisation, refer you to other potential customer, and will resist the activities of competitors attempting to attract their patronage
(Emma, 2008) Company can create more profits via a long-lasting relationship with loyal
customers
Several objective measures of customer loyalty that show a relationship with financial
performance are numbers of referrals, word of mouth, purchase again, purchase additional
products, increased purchase size, and customer retention and defection rates
With this knowledge, the study had a foundation for the proposed solution in chapter 4
1.6.3 Customer satisfaction
Customer satisfaction is defined as the degree to which customer expectations of a product _ or service are met or exceeded (Bnet, 2009)
Customers may have widely differing reasons for purchasing a product or service and therefore any measurement of satisfaction will need to be able to take into account such differences Besides the quality of products and price, the quality of after-sales service, sales representative, and promotion activities can also be crucial factors in influencing any purchasing decision Therefore, these dimensions can be used to measure the level of satisfaction as per customer’s mind
Customer satisfaction can promote loyalty, meaning that a customer loyalty forms the basis of a valuable relationship with a company
1.6.4 Customer complaint handling process The importance of handling customer complaints
Trang 19business, but those who wish to develop customer loyalty on a large-scale basis may also go beyond the standard Involving customers by using their complaints as initiators for change is a masterstroke that makes the customer feels that he is being listened to If the company takes care of angry customers well enough, they will gain their loyal easily An effective complaint handling system can give benefits to business in several ways:
Improved product quality and service delivery
Fewer mistakes and less time spent fixing them
Better understanding of customers’ needs Greater customer loyalty
More customers through word of mouth advertising from satisfied clients Less time and money spent, attracting customers tt: £ £€@ # £ È Ê
Improved business reputation
_ 4 A healthier bottom line |
Effective handling customer complaint process
Complaints should be handled effectively by having a policy of welcoming customer complaints, setting up a system to handle complaints effectively, training staff to handle
, complaints well, dealing with the complaints you receive immediately, ensuring the
process for making complaints is easy for customers, and regularly reviewing complaints record
Identifying complainers
When having problem with an enterprise’s products or services, each customer will react in
different way There are various kinds of complainers It is helpful for the enterprise to define all kinds of complainers they are dealing with, especially in B2B industry In this area, companies have few customers, so they can easily indentify the characteristics of
complainers |
The following information should be figured out:
4 How many complainers are there in the company?
+ How often do they complain?
4 What do they do to complain? ` s How đo they express their complaint?
Trang 20ve The meek customer: Generally, the meek customer will not complain
The aggressive customer: Opposite of the meek customer, the aggressive customer readily complains, often loudly and at length
“+ The high-roller customer: This customer expects the absolute best and is willing to
pay more for it Like the Aggressive Customer, the high — roller Customer is not
interested in excuses -
%* The rip-off customer: This complainant’s demand actually is searching more
benefit than what they require
“& The chronic customer: Most chronic complainant will accept and appreciate
efforts to make things right This customer wants an apology and appreciates it when you listen
After indentifying complainers and clarifying their behaviors, company can plan the suitable strategy to handling with these complainers
1.7 CONCLUSION
After discussion of this chapter, this study has a foundation for the two last chapters The overview of CRM and important factors impact to an effective CRM can be used as base to
give comments for CADIVI’s CRM Based on the theory of CRM, this study can clarify
Trang 222.1 CADIVY’S PROFILE ANID), 2.1.1 General introduction
Vietnam Electric Cable Corporation (CADIVD), established on 06/10/ 1975, is a state- owned enterprise specializing in manufacturing various kinds of electric wire and cable to ee Load! Đ/ vat
supply to national economy as well as daily consumption and exporting In September 2007, CADIVI was equitized and became a joint-stock corporation
Being a leading electric wire and cable manufacturer, CADIVI pursues the slogan "Good Conduction - Safe Insulation — Power Saving" CADIVI products are produced and tested in conformity with national standard TCVN and popular international standards such as IEC, ASTM, JIS, AS, BS, DIN, UL CADIVI is the first wire and cable manufacturer in ‘Vietnam obtained ISO 9002:1994 certificate in 1998, switched to ISO 9001:2000 in 2002,
and upgrade to ISO 9001:2008 now
CADIVI always focuses on quality, style, price of products and be able to satisfy all customers requirements of electric wires and cables With the motto "transmitting power to
everywhere", CADIVI products have accompanied with electricity industry development
CADIVI joined large projects such as 500KV, 220KV, 110K V transmission lines; national
electric grid improvement; rural area energy projects CADIVI has been the leading brand in the industrialization - modernization of Vietnam
2.1.2 Products and services:
Products of CADIVI include:
- Building wires and cables
s- Power cables
“4- Bare overhead conductor (copper and aluminium)
“+ Others: Magnetic wires, medium voltage cables, aerial bundled cables, service entrance cables, sector cables, duplex cables, control cables, water-blocked
cables, flame retardant cables, fire-resistant cables
Trang 23For the power companies, electrical engineering construction companies, and civil engineering companies, CADIVI delivers products on field upon customers’ requests For overseas markets, CADIVI has exported to USA, The Philippines, Iraq, Taiwan, Laos, Myanmar, and Cambodia
Satisfying customers with the best products and services, all products of CADIVI are
guaranteed in 12 months from the date of putting in operation or 18 months from the date
of delivery along with the most convenient after-sales service 2.1.3 CADIVI’s Culture:
CADIVI culture is represented by behavioural disciplines set by the leaders, based on the
vision, mission, and values of the company
“& Vision: CADIVI has strived to become a leading electric wire and cable company
in Asean by 2015 |
‘+ Mission: To bring the best, safest and the most saving solutions of electrical
transmission to the consumers; to maximize profits of shareholders and interest of employees; and to contribute to a better society
Values: CADIVI addresses:
o With customers, CADIVI provides the true value, including the value in reliability of product quality and the value in advantages and satisfaction of
services |
o With employees, CADIVI commits to provide a professional working
environment, development opportunities, income deserved with
contribution to the general achievements of the Company, and pride of the
company
o Shareholders can be confident in the development of the company, and
receiving high and sustainable interests in CADIVI
o More than ever, CADIVI’s value to society is giving employment opportunities and environmental friendliness
CADIVI has taken many years to create an active culture which will increase their business, and every member of CADIVI is aware of the company spirit: making the best effort in the work, creativity and efficiency improvement, setting the goals in conformity
Trang 24directing the consumers to the slogan “Vietnamese use the Vietnamese high quality
commodities”, and achievement of each person is the achievement of CADIVI and vice versa
2.1.4 Markets and customers
CADIVI’s operation and development has been based on three crucial segments of market: master market, project market and exporting market:
4k Master market include agents, distributors throughout Vietnam
“4 Project market is power companies, civil engineering, industrial construction contractors
- Exporting market includes overseas markets such as USA, Myanmar, and Laos 2.2 MARKET SHARE AND GROWTH RATE:
2.2.1 Market share:
Being the leading corporation in electric wire and cable manufacturing, CADIVI takes the
Trang 252.2.2 Growth rate:
CADIVI’s revenue has constantly grown with high rate in the period of 2005-2007 which
is even higher than the growth of GDP and electrical equipment industry CADIVI is the unique enterprise to be ranked in Top 200 of the largest domestic enterprises in the domain
of electric wire and cable studied and selected by the United Nations Development
Program UNDP (2007) However, its growth rate was fallen to 8.94% only and continuously low as 5% in first three quarters of 2009
Figure 2-2: Comparison of CADIVI’s growth rate (%) 35 32.21
Y2005 ¥2006 Y2007 Y2008
HGrowth of Vietnam GDP (%) tfaGrowth ofindusty(%) ĐH Growth of CADIVI (%)
(Source: Synthesize from Reports of GSO and CADIVI’s data) Sales revenues by customer group
Figure 2-3: Sales by customer groups (Million USD)
66.79
Y2005 Y2006 Y2007 Y2008
Distributors #Project Exports & Others
Trang 26The figures show that the sales by the group of distributors have risen significantly in during 2005 to 2008, meanwhile other groups of customer have been slight up, even down
Sales of distributors group have reached highest point at 66.79 million USD in 2008 Figure 2-4: The percentage of sales by customer group in 2008 (%) 7% | 14% E4 Others đExports E1 Project Distributors
(Source: CADIVI’s reports — Y2008)
The above results show that the customer group of distributors took the highest proportion
of total revenue of the-company (accounting for 66.80% in-2008) and had high annual | growth rate This demonstrated that distributor group, known as master market, is very important to CADIVI’s current business and developing strategy
2.3 DISTRIBUTION CHANNEL
CADIVI’s distribution channels include company’s showrooms, branches and distributor
system It has illustrated in the below chart This project will focuses on distributor system
Trang 27` Figures 2-5 CADIVI’s distribution chanel Pm, fe SL PONE BPE ROE TBH I FH, NI AON 1 } i Vv a 'CADIVPS showroom Branches - | (09) 7 (02) 0 " | v4 t { 5 E { ‘Sub-distributors } (L2-3) 1 ! Ỳ Customers - ys (End user/ project customers) :
2.4 FIRST LEVEL DISTRIBUTORS OF CADIVI 2.4.1 First level distributors
CADIVI specifies the distributor system as the target market (master market) at present and in the future This is the most important market segment because it is the most quick and stable consumption The first-level distributors (Distributors) are the dealers who sign contract directly with CADIVI and distribute CADIVI products to sub-dealers and
consumers over the country
At present, CADIVI has 165 first level distributors to distribute products nationwide These first level distributors have managed tens of sub-distributors, and other retailers; thus the distribution system has developed vigorously and widely
2.4.2 First level distributors’ needs
According to CADIVI’s CRM plan of 2009, the demands of first level distributors are:
Trang 29CHAPTER 3:
SITUATION ANALYSIS
3.1 External analysis 3.2 Finding from the study 3.3 Finding from the survey 3.4 SWOT analysis
’ 3.5 Conclusion
Trang 30This chapter covers the aspects concerning external and internal environment analysis The findings of the study will be ‘presented Based on the findings, analysis of current CADIVI’s CRM problem and analysis in customer loyalty and customer satisfaction are explained 3.1 EXTERNAL ANALYSIS - - 3.1.1 Political and legal factor analysis tk Stabilization politics: Politics in Vietnam is stable This is the advantage of Vietnam in worldwide environment a Counterfeit law:
Counterfeit problem has become very serious for Vietnamese enterprises The counterfeit law is not clear and tied enough in Vietnam In the electric cable market, many counterfeit articles are sold in the markets, such as Kim Bien, Ta Uyen, and Dan Sinh This causes a bad impact on industry environment and CADIVI’s business
4 Individual income tax:
This is a new tax law that was applied in 2009 More or less, it has influences human resource management, especially low-income employees
a Import duty:
In 2009, electric cable goods are exempt from import duty This is a disadvantage for local manufacturers in Vietnam
3.1.2 Economic factor analysis
‘ Economic crisis effects
The year 2009 is a year of global economic crisis This crisis has affected all businesses in
Vietnam
se Economic growth rate
According to a Bloomberg’s article, the growth rate of Vietnam will reach 7% in 2010 In
2008, this indicator was 6.23% But if the growth is too fast while government does not
Trang 313.1.3 Social factor analysis
Vietnamese people, especially Ho Chi Minh citizens, have a significant change in taste and living condition In electric cable market, demands of accessories have increased remarkably
3.1.4 Technological factor analysis
Though Vietnam government encourages enterprises to invest in R&D activities, the
budget is low and mechanism has not been renewed Therefore, R&D activity cannot get high results Most technologies are imported and transferred from overseas equipment
suppliers | |
3.1.5 Competitors:
According to the report of Electric wire and cable association, there are more than 100 small and large-scale companies specializing in producing electric wire and cable in Vietnam They can be categorized into three groups as follows
” Large-scale companies in the country such as Tran Phu and Tan Cuong Thanh (TCT)
“ Foreign invested companies and joint venture companies such as LS-Vina (Joint Venture Company with Korea) and Taya (100 % owned by Taiwan)
4 Other small- and medium-scale electric wire and cable companies such as Dai
Long, Thinh Phat, and Lien Dat These companies take an insignificant market
share due to their new establishment
As mentioned in the previous chapter, CADIVI’s competitors are large-scale electric cable manufacturers whose share is 15%, 13%, and 11% of domestic market Those competitors’ growth has increased and become quite competitive
3.2 FINDING FROM THE STUDY:
Trang 32CRM is an important tool to improve selling goods, especially in B2B marketplace CADIVI’s customer relation has tended to go down By analysing current CRM strategy, measuring customer loyalty and satisfaction, CADIVI can indentify its problem precisely CADIVI’s CRM strategy was planned in early 2009, it has been found some concerned issues after one-year implementing as follows:
3.2.1 Practices of CADIVI’s CRM strategy implementing
By interviewing with CADIVI’s Deputy Director and Department of Commercial, some
unreasonable points were found as follows:
No binding agreement
There is no binding condition between CADIVI and distributors Therefore, distributors can be represented for others who are CADIVI’s competitors And if the offer from other suppliers is more attractive, those distributors may reduce orders to CADIVI With loyal customers, company can have a virtual lifetime contract with them, but CADIVI’s customer loyalty is not high enough
No prompt report of customer’s satisfaction
In today business, customer satisfaction is hard to maintain With all the competitions give customer more chances to increase their interest and expectation Under this effect, customer satisfaction is changing quickly Therefore, it is hard to sustain customer interest in particular product or service
Current CADIVI’s CRM practice requires customer satisfaction report to be conducted on yearly basic; as that result, CADIVI’s customer data is not up-to-date on time
No complete view of individual customers |
Trang 333.2.2 Customer Loyalty
Customer loyalty is the behaviour of repeat customers, as well as those that offer good ratings, reviews, or testimonials Customer loyalty is the heart of CRM strategy The goal of customer loyalty is to make customers happy so that they will return to purchase again and persuade others to use that company's products or services Customer loyalty can be
measured by observing reaction of customers ˆ
The method for collecting data is secondary data via desk research, and interviewing with CADIVI’s managers The information is about the number of distributors, its company’s sales revenues And some specific factors are used ‘to measure customer loyalty of CADIVI They are number of customer defection, number of referrals, purchase again, purchasing additional products, increasing/ decreasing purchase size
Number of customer defection:
In 2008, CADIVI had 185 first level distributors CADIVI remained only 165 distributors in 2009 In only 9 months, CADIVI lost 20 distributors Obviously, this leads to the decrease in turnover Customers decided to stop ordering, which is the visible signal to realize customer defection
Figure 3-1: ‘The number of distributors in latest 5 years 200 ⁄⁄ | 185 180 162 = 160 15 a 140 120 100 80 60 40 20 oe Y2005 Y2006 Y2007 Y2008 Y2009 (Source: CADIVIs data — Q3Y2009) Number of referrals: -
Referrals are the new distributors who are introduced to the company The number of referral is strong enough to make the business decision at CADIVI In early 2009, CADIVI
Trang 34from new distributors reduced dramatically which was more than 60% in 2007 and 2008 This number shows that distributors’ belief toward CADIVI has been out of balance When customers lost their belief, they certainly do not present that product to anyone
~ Purchasing again: |
Although gaining 20 new distributors, only 80% of them repeated their purchase 73% of
old distributors agreed keeping their business with CADIVI This means company will
continue losing at least 20% of its current distributors which can bring up to 53%
(=80%*66.8%) of CADIVI’s revenue
Purchasing additional products:
Beside main products, CADIVI also provides many accessories for electric wires and
cables Buying additional products can show how customers care about supplier But the number of distributors purchased this item is still low, approximately 70% of distributors Decreasing purchase size:
Depend on latest sales reports, 49% of distributors have not increased their purchase size in
Trang 35Once distributors decide to cut down the value of orders, their next step may be stopping
the purchase Tracking the purchase size of each distributor will show a full view of their
state, and help company adjust their plan timely
In fact, using this factor to analyzing customer loyalty is not correct completely Because
this factor also depends on many economy indicators, such as GDP growth rate, industry
growth rate, inflation, or economic crisis _
Seeking competitive data:
According to feedback information from sales representatives, some distributors are now
seeking new suppliers And 85% of distributors are not willing to share competitive data anymore “One of differences between ordinary customers and loyal customers is that ordinary customers are seeking competitive data, but loyal customers are sharing competitive data” (Christensen, 2006) Competitive data that customers are looking forward to are competitive prices, their products/ services, their monthly promotion activities, etc Customers are not willing to share competitive information, which shows
that their belief on CADIVI begins to get loose 3.3 FINDING FROM THE SURVEY
Implementing CRM, CADIVI has put many efforts to improve customer satisfaction in the following aspects: customer service, sale representative, product features and price
With the above concerns, the survey has been conducted to measure the level of customer satisfaction at CADIVI
A survey was used to collect data The survey was conducted with distributors via face-to- face interview, telephone interview, courier, fax, and email The participants are representatives of their business such as the owners, the directors, the managers, and
salesperson at distributor’s organization The questionnaire is to obtain customer’s perception of the level of customer satisfaction on customer service, sales representative,
product and price
Of 45 questionnaires delivered, 40 responses were received
Trang 363.3.1 Customer service:
The first part of questions is to evaluate CADIVI’s customer service The questions have
asked distributor’s agreement on the following dimensions: easy to contact to contact the
company’s customer service, meet customer’s requirement on lead-time; on-scheduled delivery time; delivered goods in correct quantity as per order; delivered in good packing condition; sufficient warranty time and policy; sufficient warranty time and policy
The result has been found as follows:
“L Five of seven researched components have a high or medium mean, but two components needs to be deeply analysed where its means are low They are
delivery time and payment term
<The mean of seven components has showed as below:
Figure 3-3: Satisfaction on customer service
- Reasonable payment term Sufficient warranty time and policy Delivered in good packing condition Delivered goods in correct quantity as per order On-scheduled delivery time Meet customer’s requirement on delivery time
Easy to contact the company’s customer service
| Delivery time |
With the high growth rate of construction and electrical industry, customer demand on ~~~
delivery is heighted accordingly Delivery time is a critical factor in customer satisfaction,
like a commitment made by the company Based on the information collected from the
research, it is found that distributor do not have a high pleasure on CADIVI’s delivery
Trang 37Table 3-1: Satisfaction on delivery time Level of agreement | Number of responds | Percentage _ Strongly disagree 3 7% Disagree 7 18% Neutral 3 7% Agree 22 55% _ Strongly agree 5 13 % Total : 40 100 %
25% of distributors conclude that CADIVI was unable to meet their expected lead-time So, they replaced with competitor’s products Those distributors expect that the delivery should be reduced from 25 days to 20 days
The level of customer satisfaction on delivery time is illustrated in the below chart Figure 3-4: Satisfaction on delivery time 13% 7% f Strongly disagree £2 Disagree đ Neutral E Agree B Strongly agree
Additionally, the qualitative survey has been conducted via interviewing with the key
distributors Some feedback has given that the reasons of looking for new suppliers are:
CADIVI’s delivery time is long, unavailability of stock and products All these are
required to meet end-customer requirements Therefore, CADIVI need to analysis to ._^~
Trang 38Payment term
Payment term is another factor to evaluate the quality of customer service The result of the
question for reasonable payment is showed as follows:
Table 3-2: Satisfaction on payment term Level ofagreement | Number of responds | Pereentage Strongly disagree 1 Disagree 4 Neutral 6 Agree 24 Strongly agree 5 Total : 40
According to the result, 13% of respondents are unsatisfied with CADIVI’s current
payment term Currently, CADIVI has offered a credit payment with the amount of 100,000 million VND within 30 days This condition is below customer expectations
which does not help much on reducing working capital to those distributors whose order
_ are 3-5 times larger than this credit amount In other hand, the distributors have to give longer credit to the sub-dealer and end customers They expect CADIVI increase the credit amount and time by double, means 200,000 Million VND for 60 — 90 days
Trang 393.3.2 Sales representative:
The second part of questions is to assess CADIVI’s sales representative The questions have asked distributor’s agreement on the following dimensions: efficiently solving the complaint; quickly handling my inquiry; adequately explaining the offer and promotion policy; salespeople are knowledgeable about products; courteous; well groomed; friendly The result of the research as follows:
sẻ Among seven evaluated components of sales Tepresentative, four of them have
low mean where CADIVI’s sales representative have problem with handling customer complaints/ enquiry, their knowledge of products and updating customer on company’s activities
‘The mean of seven components has showed as below:
Figure 3-6: Satisfaction on sales representative
Salespeople are friendly Salespeople are well groomed Salespeople are courteous Salespeople are knowledgeable about products Adequately updating information about
company's activities
Quickly resonding customer inquiry Efficiently handling cusomer complaint
Customer complaint handling
Handling complaint i isa straight way to customer’s mind The purpose of this question is evaluating the efficiency of handling customer complaint by sales representative The
Trang 40Table 3-3: Satisfaction on customer complaint handling Levelofagreement | Number ofresponds | Percentage _ Strongly disagree 0 0% Disagree 9 23 % Neutral - 8 20% Agree 23 57% - Strongly agree 0 0% Total : 40 100 %
The result states that 23% of respondents have not agreed that CADIVI has efficiently solved their problems This number of 9 distributors is lower in compare to 23 distributors
have agreed Additionally, the company report has indicated that 20% complaints have repeated still In B2B environment, every customer can be an important cause of reducing revenue, so CADIVI must to pay attention to improve this factor
Figure 3-7: Satisfaction on customer complaint handling 0% 0% 23% m Strongly disagree Disagree 3 Neutral @ Agree ci Strongly agree 20%
CADIVI has not assigned any department to receive, solve and respond to customer
complaints By current process, customers have directly ‘placed their complaint to—
CADIVF's sales representative The sales representative firstly contacted to the involved
departments to understand and find the solution to solve the problem Then transfer to customer services staff who always have to deal with many issues such as process order,