Vinh Tuong Industrial Corporation – VTI – has the headquarters at Lot C23A, Hiep Phuoc Industrial Zone, Nha Be District, HCM city. VTI began becoming a joint stock company at the date of 1st January, 2006, with the total of charter capital - 80 billions VND, from combining three main members:
- Vinh Tuong 2 Private Enterprise: operating in trading - Vinh Tuong Joint Stock Company in Vinh Phuc – Ha Noi
- The new manufactory plants in Hiep Phuoc IZ: starting operation in July 2006.
The capital increased 105 billions VND in September, 2006.
VTI has a head office located in the address of 333 To Hien Thanh street, District 10, HCM city.
Continuously, the part will present some key particular traits and operating performances of VTI in the recent years.
2.2.1. Particular traits
VTI is the first and leading Vietnamese business in manufacturing and supplying grid ceiling, partition, and gypsum board, which replace for importing products. VTI owns two factories (one in Hiep Phuoc IZ,
another in Quang Minh IZ) of grid ceiling and partition with the total capacity of 16,000 tons (products) per year. Considerably, in 2006, VTI took a joint-venture with UCC group (the biggest group of manufacturing cement and gypsum in Taiwan) to invest a modern factory of gypsum board with the designed capacity of 8,000,000m2 gypsum board per year. It is Vinh Tuong Joint-Venture Corporation – VTJ – in Hiep Phuoc IZ Nha Be District HCM city. All products of VTJ are distributed by VTI.
At the present, the market share of VTI takes about 60 percentage of Viet Nam market. The distribution system includes 350 agents in whole country. Beside the strong internal position, VTI defines the brand name of good quality by exporting the products into some markets like Singapore, Malaysia, Cambodia, and Bangladesh…
In the proud, VTI is considered as “the leader in wall and ceiling systems” in Viet Nam.
2.2.2. Performance
This is the operating performance of the business in the recent years of Vinh Tuong 2 Private Enterprise – VT2.
52 67
98
153
211
0 50 100 150 200 250
Billion VND
2001 2002 2003 2004 2005
Year
Turnover of VT2 in the years of 2001 - 2005
Figure 2.3 – Turnover of VT2 of the years of 2000 -2005 (Soucre: Sale department of VTI)
The Revenue of the first year operation of VTI (2006) is 305 millions VND.
2.2.3. Brand name
The brand of VTI is so popular with the image of the logo.
o Describe the logo:
- Background: the square in black with the yellow border.
- Content: The stylized letters of V, T in yellow at the left show the products of VTI includes grid ceiling and gypsum board.
The small circle in yellow at the below corner.
- Colors: Black and Yellow
o Meaning of the logo is the characteristics of the brand:
- Name: Vinh Tuong: “Vinh Vien Cat Tuong” – Good Fortune Forever is like the wish for customers.
- Image:
1. The stylized letters of V, T: stand for the images of ceiling and partition of a house.
2. The small circle in the big square: make the balance for the logo. In addition, it presents the philosophy of Square and Circle of Vietnamese. This is like a commitment for customers about the improvement to get the perfect in quality of products and service of VTI. Prestigious and Quality.
- Colors:
1. Black: means elegant, luxurious, smart, strong, reliable and enduring.
2. Yellow: means happy, rich, well-off and prosperous.
2.2.4. Organizational structure
VTI operates in the model of joint stock company, decentralizing to two vice general directors, the managing director in the South, the managing director in the North, and the managing director in oversea market.
- The managing director in the South (Southern managing director):
control the area from Da Nang province to Southern provinces, including the manufactory in Hiep Phuoc IZ.
- The managing director in the North (Northern managing director):
control the area from Quang Tri province to Northern provinces, including the manufactory in Quang Minh IZ.
- The managing director in oversea market (Oversea managing director): is under controlling of the Southern managing director.
44 Board of Directors Managerial
Board
Board of Checking
Quality Control
Southern M. Directors
Northern M. Directors
Oversea M. Directors
HR Manager
Fin.& Acc.
Manager
Marketing Manager
Purchasing Manager Project
Manager Sales
Manager
QC Manager
Table 2.1. Organizational structure of VTI
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45 Table 2.2. Organizational structure of Southern area
Table 2.3. Organizational structure of Northern area HR
Manager
Fin.& Acc.
Manager
Marketing Manager
Purchasing Manager
Sales Manager
Project Manager
Manager of Manu.
QC.
Manager
Northern M. Directors
HR Department
Fin.& Acc.
Manager
Marketing Department
Sales Manager
Project Manager
Producing Manager
QC.
Manager
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The quantity of employees
The total employees of VTI have 346 persons (calculating on the date of 1st December, 2006).
Degree Number Rate
Master 10 2.89%
BA, BSc 45 13.01%
College 48 13.87%
High School 88 25.43%
Others 155 44.80%
Total 346 100.00%
Figure 2.4 – Quantity and Qualification of Employees of VTI (Soucre: Human Resource department of VTI)
Qualification of Employees in VTI (1st December, 2006)
2.9%
13.0%
13.9%
25.4%
44.8%
Master BA, BSc College High School Others
Figure 2.5 – Qualification of Employees of VTI 2.3. COMPETITIVE STITUATION
2.3.1. Historical story of VTI
In the early time (in 1992), Vinh Tuong was a small store of materials building in Hochiminh city. In 1995, the business owners concentrated in trading products of wall and ceiling systems, which were imported from Thailand, Taiwan… In 1997, Vinh Tuong private enterprise set up a first manufactory of grid ceiling in Le Minh Xuan IZ (Southern); and continuously importing the gypsum board of Elephant and BPB Board form Thailand. These are the high quality products which were favored by the customers. The business contributed the distribution system with more than 300 agents in the whole Viet Nam. To satisfy the being bigger demand in the Northern, Vinh Tuong built a new factory of grid ceiling in Quang Minh IZ in 2005.
With the economic development, the speed of building of Viet Nam is increasing very considerable. In the late year of 2005, the La Farge group, the manufacture of Elephant board, wanted to contribute a plant of producing gypsum board in Hiep Phuoc IZ, Viet Nam. Vinh Tuong with the great advantage of the owning wide distribution system asked them for being an exclusive distributor of this product in Viet Nam. However, La Farge denied the request.
No give-up. In 2006, the owners of Vinh Tuong business decided to move the grid ceiling factory form Le Minh Xuan IZ to Hiep Phuoc IZ, where they were building a new big manufactory of gypsum board. They formed the biggest manufactories plants of grid ceiling and gypsum board in Viet Nam (with the total investment of 11 millions USD). Besides, Vinh Tuong private enterprise transferred to Vinh Tuong Industrial Corporation – VTI – on January 1st 2006.
When Vinh Tuong business made decision of building the new manufactories plants in Hiep Phuoc IZ, Lafarge group and BPB group immediately stopped supplying gypsum boards for VTI. LaFarge wanted to set up new distribution system. And BPB group chose the companies of Le Tran, Huy An, An Huy, Huy Hoang (the previous big agents of Vinh Tuong) as the official distributors in Viet Nam.
2.3.2. Introduction of La Farge and BPB
2.3.2.1. La Farge group (with Lagyp board in Vietnam)2
Lafarge, which comes from France, is the world leader in building materials. Lafarge holds top-ranking positions in each of its four Businesses: n°1 in Cement, n°2 in Aggregates & Concrete, and n°3
2 Referent from the website: www.lafarge.com
in Gypsum. The Lafarge Group is listed on Paris and New York stock exchanges. With a workforce of 71,000 people, the Lafarge Group is present in 70 countries. Its sales for 2006 amounted to € 17 billion.
The Gypsum Business sells plasterboard systems, gypsum blocks and sprayable plaster for construction finishing work, new buildings and renovation. In 2006, they gained the sales of € 1,632 million (up 10.3% compare with the year 2005) with 6,361 employees. In this year, Lafarge inaugurated the new production lines in Vietnam and Morocco. They were successful in the start-up of the Buchanan plant near New York following modernization and a doubling of capacity, thereby strengthening Lafarge’s position as a high-quality, and low- cost producer in each of its North American markets. Active in 25 countries, the Gypsum Business has 73 industrial sites worldwide.
Gypsum Division locations of Lafarge in the world.
Illustration 2.1 - Gypsum Division locations of Lafarge in the world.
2.3.2.2. BPB group with BPB board3.
BPB, which comes from British, is the world leader in the supply of plasterboard and gypsum plasters, and a major supplier of insulation,
ceiling tiles and related products for interiors, serving growing markets for building systems in over 50 countries. Its sales for 2006 amounted to $41,596 million. To gypsum, the sale gains $3,895 million this year.
BPB is one of the world's leading fast-track lightweight building systems companies, operating 90 manufacturing plants and serving markets in over 50 countries. A subsidiary of the UK based BPB Group; BPB Asia is managed from its headquarters in Bangkok, Thailand. BPB supplies to over 25 countries throughout Asia form Australia/ New Zealand to the Middle East form Korea to Sri Langka.
These operations supply and offer the widest range of products for ceiling and wall and partition systems. The range includes gypsum boards, ceiling tiles, plasters, galvanized steel frames and all associated accessories including finishing solutions, tools, fixtures and fixings.
BPB Asia currently has five manufacturing plants – two in Thailand, two in India and one in China. The highest standard of product quality is a priority. BPB Asia has combined BPB best practice and world wide R&D competence to provide on-going development of production technology. The manufacturing plants are world class facilities.
2.3.3. Competitor analysis
VTI is a manufacturer of both grid ceiling and gypsum board. The market share of grid ceiling is about 60% of Viet Nam market. There are a lot of small manufacturer in Viet Nam and some importers.
However, it seems that they can not become the considerable competitors of VTI in this time. To gypsum board, there are two
counterbalance rivals. They are Lagyp board from La Farge group and BPB board from BPB group. Hence, in this part, the contents will focus to analyze the two competitors.
Why call BPB and Lagyp are the counterbalance rivals with VTI Corporation?
This is the predicted view of market share of gypsum board in
Vietnam in 2007. The data is made by the board of Directors of VTI.
Illustration 2.2 – Market share of Gypsum board in Vietnam (Source: Marketing department of VTI)
VTI = 40% North market
Central Market
BPB = 20%
Lagyp = 40%
Lagyp = 40%
South Market
BPB = 40%
VTI = 60%
VTI = 40% Lagyp = 20%
The great advantage of the biggest distribution network in Viet Nam of VTI is threatening by the strategy of these competitors. Both of them want to dominate the biggest market share in Viet Nam. Lagyp board is operating very strong in North. Their domination direction is becoming the biggest in the North, then expanding in the Central and assaulting into the South. BPB board is very favored in the South.
They are willing to develop the market share in the North and then will spread to the Central.
What are the strengths and weaknesses of the competitors?
Lagyp board belongs to La Farge group.
In the past, the imported Elephant gypsum came from The Siam Gypsum Industry Co., Ltd., which belongs to La Farge group in Thailand. The brand name of Elephant was most favored in Vietnam market by its good quality and its acceptable price.
In the year of 2006, La Farge group decided to set up a manufactory of gypsum board in Vietnam. They launched the slogan: “See off Elephant, Welcome Lagyp” (- Tiễn biệt con voi, đón chào Lagyp). It meant that the Elephant gypsum board disappeared in Vietnam from this time. Lafarge Boral Gypsum Vietnam (LBGV) Co., Ltd. has the designed capacity of 10,000,000m2 per year for Lagyp board.
- Product
The beginning quality of products was so low. They were easily breakable and sagged. Until now, their quality of boards is still unstable. The rate of low quality in producing is about 20%. The manufacturing technology comes from Chinese. A lot of agencies do not support the products. However, the final customers do not
know much about this issue. Customers like to use them basing on believing the quality of foreign brand, France.
- Price
They are very flexible in price policy. There is the lowest price in the market basing on the sales policy with high discount for their distributors. Moreover, they are willing to compete by price fight because they are supported by the big financial power of La Farge group.
- Distribution
Lagyp board is consumed numerous in the North by the strong distribution network set up in the area. However, the current distribution system is not sufficient with manufacturing scale. It is in bottom neck phenomenon in distribution. Therefore, the strategy is concentrating to expand the own network. They have very good employees in marketing.
- Promotion
They are so good in advertising and PR to promote the new brand in market. The great strengths base on good finance and experience… However, the service system and technical support are not good.
BPB board belongs to BPB group.
In the past, BPB board was imported and distributed in Vietnam market by VTI. After the event of contributing VTJ manufactory, BPB Asia (regional headquarters and manufactory in Thailand) denied the trading with VTI. They chose the companies of Le Tran, Huy An, An
Huy, Huy Hoang (the previous big agents of Vinh Tuong) as the official distributors in Viet Nam.
- Product
The quality of product is so good. It has been experienced by customers and influenced intermediary forces. The quality meets the standard of ASTM (USA). However, the product must be imported from Thailand because they have no manufactory in Vietnam.
- Price
The product is distributed by some small companies, so they do not have any united price, selling or credit policy for agencies. The price of BPB board is the highest in the market. However, they are supported by BPB Asia if they needed in making the price policies.
- Distribution
The product is consumed a lot in the Western South market, some in the North, and zero in the Central. However, they do not have the own distribution network. It currently depends on the network of VTI.
- Promotion
The brand name of BPB is No.1 in the world. However, the Vietnamese distributors could not launch the great advantage to customer. They have some communication, services and technical supports to promote the products, but it seems to be not very effective.
It can see that the competitive situation is so stressful in the years of 2006 – 2007. However, VTI should not be in depth of the current struggles with new appearing competitors. The necessity is forming the long term strategies to build up the stable strong competitive advantages. The process of forming business strategy for VTI will be presented in the chapter 3.