CHAPTER 3: THE COUNTERMEASURE AND SOLUTION TO COMPLET AND IMPROVE THE MARKETING MIX OF GATEXCO 20 FOR
3.1. The definition of development and targeting strategies of Gatexco 20
a. The mission of Gatexco 20:
Master plan & development orientation of Gatexco to 2015 with the vision to 2020. In which the goal is: Build up Gatexco 20 to become one of the leading firm in the production and trading garment products . Specific targets to be achieved are:
- Set up the marketing mix strategy to develop the products and expand the domestic market as well as international market.
- Revenue in 2015: 1,200 billion (Sales of 2011: 838.62 billion vnd) - In which:
* Domestic and civil sales ratio: 45% (at present: 25%)
* Export sales ratio: 20% (at present: 9,5%)
* Sales ratio of the military order: 35% (at present: 65%)
- Focus on developing the key items like: Jacket, shirt, trousers, fabrics and
knitted products. Regarding shirt products, Gatexco will focus on developing the good quality product line with the average price ranging from 180,000 to 350,000 vnd and the target customer will be the, office staffs who have the average income with the age from 20 to 55 year olds. It is planned that Gatexco's products may compete directly with the same type of products made by big garment companies such as Garment 10, Nha Be, Thang Long, Viet Tien, Viet Thang and Artex. Making Gatexco's products will be one of the products to be listed in "Vietnamese high-quality goods" voted by the consumer
- Expansion of the market and the domestic distribution channels:
* Increase the number of domestic agents from 14 to 40 agents within three years
* Increase the number of product introduction stores from 10 to 20 stores within three years. Opening new branches, distribution channel and dealers in The Central area of Vietnam.
* Deploy the cooperation with the in major supermarkets in Vietnam like Metro, BIG C, Hapro to distribute Gatexco’s products.
- Expansion of the export market with the policy of maintaining the good relations with existing and available customers and develop, finding new customers, new markets such as South Korea, the countries in Africa. Consideration the opportunity for exporting the military garment products to the neighboring countries and the countries of the socialist system, such as Laos, Cambodia, North Korea, Cuba.
- Develop Gatexco 20 with closed and modern production lines including the construction of high quality shirt factory, complete garment factory, weaving and dyeing factory and raw material production factory. Continue the investment for expansion the raw material and accessory production lines such as mex, buttons, key, metal inserted, the fabric production line to be proactive about 70% of input materials to reduce production costs products, increase the monthly income of the employees.
- Establishment and development the fashion design center to design new product actively to supply it to the market in accordance with the tastes and demand of the consumers.
- Continue the research and study about the suitable and effective foreign investment projects to find the cooperation chance for taking the advantage of capital, engineering and advanced technology. The intensive investment is also implemented.
- To improve the production capacity in the coming years, Gatexco 20 should continue investment in depth especially focusing on procurement of the specialized automatic equipments ensuring the competitive of the products in the abroad markets like Western and European countries. Import the modern and high tech production lines and high quality materials to produce high quality products for exporting mainly.
- Gatexco 20 will call for thoroughly capital reasources and development capital, enlist the help and support of the Ministry of Industry, Ministry of Defense and the Government to approach the loans of domestic and foreign banks. Expanding relations with Western European countries and all over the world to take advantage of capital, technology and technology transfer.
b. Strategic direction and vision
- Changing the business mode from processing orders to export directly to the end-users. Gatexco 20 will define and build up a business strategy for ensuring the long- term success. Currently, for export products, Gatexco’s business mode is mainly outsourcing the garment order of the foreign companies so the decisions of changing the mode of business in garment for outsourcing to direct export to the consumers had extremely important role. Gatexco 20 has potential production capacity by a many of skilful tailors that are equipped with the best technology platform and power active in the business. In recent years, regarding the business of Gatexco 20, they have mainly implemented the outsourcing orders for apparel ( up to 90%), therefore Gatexco 20 has no direct relationship to the consumer and the profit of outsourcing contracts are lower than the expectation. This is one of the most important reasons to urge Gatexco 20 to change the mode of business to obtain higher profit.
When Gatexco 20 implements the outsourcing orders, they are fully passive to the request of the partners so in some cases, Gatexco 20 should increase the working hours and the working intensity of the employee to delivery the goods in time according to the contract. However, in some case Gatexco 20 has no order so their member enterprises have no works and their employee to become idle and out of work. It makes Gatexco 20 to be more difficult and increasing the cost of the production. Meanwhile the price of apparel products in EU markets and in the world is continued increasing and the price of garment products in the highly industrialized countries is very high. As the advantage of low labor cost of Vietnam, the foreign companies have leased the local companies to implement the outsourcing orders with cheap price. At present, the world economy is more volatile and many countries in Asia have the advantage of the cheap labor cost and even cheaper than Vietnam. In that case, the partner will grand the outsourcing orders to that countries. Therefore the production and business of Gatexco 20 will be more unstable
- For the existence and development of Gatexco 20, it is necessary for Gatexco 20 to dominate the domestic market, finding the good position in the market and expansion
the export activities. To make the plan to be realistic and feasibility, Gatexco has to conduct some specific policies as follow:
* Research for expansion the market in EU’s countries. For the familiar and traditional markets, Gatexco 20 should continue to strengthen their reputation and maintain good relationship with the partner. Meanwhile, they should also deployment to introduce their new products to the EU market and other emerging markets such as South Korea, Africa continent.
* Development of distribution channel network and trade promotion
* Promote the market research activities to find out the suitable product for production to meet the needs, tastes, hobbies and fashion of the customers. Gatexco will not provide the market the available products of Gatexco 20 but they have to provide to the market the product that are made as demand and desire of the customers. Once, the supplier is able aware of diversification of the products, they can build the suitable business plan with a suitable list of the products in accordance with customer’s interests, financial status, occupation, climate, fashion and appropriate time
- All the strategies will be developed in 3 stages to ensure that Gatexco 20 is able to afford the budget and keep pace with the chance of the new structure and plan:
Phase 1 (1ststage): 2013 - 2014 : Give priority to complete the production, design center and develop Hanoi market
Phase 2 (2ndstage): 2014 - 2015: Give priority to complete the
production facilities in province and expand the market in the Northern provinces
Phase 3 (3rdstage): 2015 - 2016: Give priority to find the partner to invest in the Central area and develop the market in the central area
Long-term Orientation to 2020:Develop to the South of Vietnam
3.1.2. Upgrade equipment, machinery, technology and production facilities
- With the support and attention of the leadership of the Ministry of Defense and as a result the business in the past three years of Gatexco 20 is relatively positive,
Gatexco 20 has continued investment for upgrading the equipment, machinery, technology and production facilities. The total of annual investment of Gatexco for facilities and equipment in recent years as follows:
2009 2010 2011
Investment for the construction and purchase
equipments (million vnd)
24,624 49,534 30,072
- As the plan for development of Gatexco 20 with modern and closed production lines and able to supply by themselves up to 70% of amount of the raw materials for production by 2020, it is extremely important for Gatexco to continue the promotion of the investment for upgrading the equipment, machinery, technology and production facility. As the plan, mission and vision of the development, the annual investment of Gatexco 20 should grow at least 15 - 18%. Thus, in the next three years with the period from 2013 to 2015, Gatexco 20 shall prepare the budget resources for investment as follows:
2013 2014 2015
Investment for the construction and purchase
equipments (million vnd)
39,780 47,830 56,328
- Deployment and complete of the projects: Build new production workshop in Gia Lam area; Complete the remaining items of the second phase of Nam Dinh textile factories investment project in Hoa Xa Industrial Zone, having the floor area of 20,000 m2 with a total approved budget of 38.8 billion vnd
- To implement the project for moving the enterprises 20B to Industrial Park West - North Thanh Hoa station with an area of 8460 m2 and estimated cost of 16 billion. At the present, this project has implemented the engineering, design, surveying, leveling works and constructed the border walls in the first quarter of 2012. For this project, it is necessary to complete the procedures, evaluation and determination of
capital investment quickly for ground breaking asap. Build the effective exploration plan of land, buildings at the old location.
- Requests for the approval of the settlement of the pending projects before merging with Gatexco 20 like: the enterprises 20B and 199 projects (completed the procedures and reported to MOD and General department of Logistics in the second quarter of 2012).
- Investment for procument the Jiger high-pressure dyeing machines. Implement the master plan on upgrading equipment, machinery at the advanced level. Gatexco 20 will supply the additional dyeing and finishing equipments for knitting factories and supplement the specialized equipment like sewing machine and renew sewing machine that is fully depreciated. By the end of 2015, Gatexco 20 will complete the upgrade of 80 - 90% of the garment equipments.
Strengthen the technology and quality management of the production units, applying the mounting equipment thoroughly, promoting the technical innovations in Gatexco 20, research and application the high technology, especially having the initiatives for technology improvement, increasing the labor productivity, quality of the product and reducing the production costs.
Implementing the equipment overhaul plan effectively and continue the innovation of the garment equipment that have been invested since 1996 onwards, supplement the laboratory equipment for quality control of the fabric and fibers
- Besides it, Gatexco must focus on coaching the managers and technical engineers to master and able to manage and operate the new technological production line effectively
3.1.3. Expansion of business and product diversification
The trend for expansion of production and business scale, diversification of the product is inevitable trend of the development. The fact is that, the type of customers of Gatexco is increasing and more diversification. Therefore the tastes of the customer are also more diverse. On the other hand, with the characteristics of the textile industry, the product only exist in a certain period of time and there are continuous changes on
designs, fashion and materials according to the consumer’s tastes that are changing according to season and year to year. The needs for garment product are also different by age, season, living region, customs, income levels. Once the more growth of the society , the higher requirement of civilized dress.
Therefore, the garment products need to be much diversified in term of size, design and fashion. In the future, Gatexco 20 must be more active to expand the production scale and business activities to be able for supplying a wide variety of finished products and raw materials to the market. Specifically, besides Gatexco 20's traditional products such as pants, shirts and jackets, Gatexco 20 should promote the production of high quality textile products like fabric to supply to garment member enterprise and the other will be exported and sold to the garment companies in Vietnam.
Gatexco 20 must promptly complete the construction of design research centers to be able to design of products by themselves to meet the diverse tastes of the customers. In addition, Gatexco 20 also needs to focus on improving product quality with beautiful and eye-catching package and convenient for users.
Implement the financial investment to diversify the business types as selective manners. At present, Gatexco 20 has large cash balances, meanwhile its ratio between financial investments and total assets is very low. Therefore, Gatexco 20 should use a part of this money for finance investment in a selective manner for feasibility projects.
Gatexco 20 should consider carefully to select the diversification of occupations on the basis of investment to the companies in the same industry or the subsidiaries in the different forms of M & A, increasing the share holding rate to increase the scope of business and ability to support the growth of Gatexco 20. Besides it, Gatexco 20 should focus on the use of their land resources to develop the real estate projects. This is considered as a proper plan when Gatexco 20 has good financial resources and ability to raise large amounts of capital
Currently, an area to be considered with high-margin is the education and training business. Gatexco 20 should develop a long-term and suitable development and
investment plans to develop vocational training center for training the students for garment and textile industry of Vietnam
3.1.4. Develop a professional working environment
Under the complex, dynamic and modern environment of garment and textile industry, the professionalism is one of the leading criteria to determine the success of a business and the promotion of the individuals. So professionalism at work is increasingly promoted and is one of the first requirements for employees. Therefore, the profession of the work is highly appreciated and it is priority issues to the employees . Thus, how we can learn about the profession and what we should do to be able to build their own working style with profession of the works ?
In Gatexco 20, all works must be standardized through the development of
specific workflow. For example, the process for packing the export shirts, process for sewing the T-shirts, procedures for assessment, recruitment, reward and discipline the employees. All the works must be conducted in a professional manner by the processes that have been established by Gatexco 20, based on the standards of the ISO 9001:2000 quality management system.
When the processes have been established, all employees of Gatexco 20 must be trained, aware of the importance of the implementation of compliance with the provisions. For example, the employees have to go to work on time and complete the assigned work as the schedule, and do not permit to do personal works during business hours, not gathered and sectarian and are responsible for doing wrong thing, causing the damage and delay of the works and try to fix the problem in an optimal way. It means that all the employee have to be responsible for their actions own and trying to get the performance with higher result than expectations of their superiors, customers and partners.
On the other hand, Gatexco need to build up its corporate culture, making a difference, motivation and good working environment. For example, Companies require all employees to wear a uniform during the working hours. Everyone must be neat and tidy in their work, the application of 5S, enhancing the team work spirit.
In addition, regarding Gatexco 20 side, they must establish favorable benefit policies, relating to employees’ right such as: policies of the wages, bonuses, allowance to create the fairness among the employee to encourage them to promote the creativity and responsible works.
Always coaching the employees to improve their qualification and awareness about obligation and benefit