3. Evaluation of PLC’s current competition power
3.3.1. PLC’s key strengths in lube & grease business
a. PLC’s facilities
- As lubricant oil products of PLC Company is prepared domestically on the
foundation to import key material, therefore, technician facilities serving for manufacturing industry of Lubricants And Grease products are essential important resources that have significant role in the maintaining and improving competitive status in the production, manuafacturing of PLC Company .
- Scale and capacity of lubricant oil making up of PLC Company and enterprises in Lubricants manufacturing industry in Vietnam (the details in attached table 1):
This table proved that in Vietnam : PLC Company has total lubricant oil making up equivalent to the company with greatest capacif BP Petco which has created scale advantages forPLC Company .
- Especially PLC Company , as being inheritaged from Petrolimex, continued to extend the investment and operation: Thuong Ly Lubricant Oil Factory and Nha Be Lubricant Oil Factory (those detailed scale, capacities, tehnologies have been introduced at above mentioned article 1.7.1, item 1) distributed evenly at the two ends of the country that has created special advantage for PLC Company :
+ Both those two fatories have advantageous places with wharfs which easily receive oil carrying ships from overseas imported to Vietnam , adjacent to mass comsummation markets of Lubricants And Grease such as HCM City , Hai Phong , Quang Ninh …
+ Both the two fatories of PLC Company has advanced manuafacturing technologies, high automatization with equipment imported from the world leading industrial countries such as: USA, Germany, Japanese, South Korea...
+ There is directly under intermediate transition warehouse of Lubricants And Grease in the center of the regions all over the country: Hanoi , Da Nang (convenient for railway transportation), Can Tho (easy to transport by river way) this is a significant advantage of PLC Company .
PLC Company is the enterprise with great technical facility system (preparation factory, wharf , transistion warehouse ) spreaded evenly all over the country.
b. Financial resource :
- Financial resource of PLC Company is one of strong resource which is presented in two main parts:
+ Total asset that PLC Company seized, used at periods at the end of: 2008 is beyond 1.427 billion VND, 2009 is 1.303 billion VND, 2010 is 2.235 billion VND ;
Investment value on material facilities is increased with annual high rate;
+ Proprietor’s capital source of PLC Companye increases strongly at the end of the year period: 2008 is more than 317 billion VND, 2009 is more than 473 billion VND, 2010 is 738 billion VND.
Reviewing on scale and criteria of rather great total asset and proprietor’s capital source as above mentioned, PLC Company has enough conditions to invest to build necessary infrastructurec to import great volume of original oil to prepare Lubricants and Grease products to supply in the market.Silmutaneously, the Company has condition to exploit economic efficiency due to great scale on many aspects that currrent competititors take year to have.
With structure, conditions on above mentioned financial resource, it proves PLC Company has created prestiges with credit organization, therefore, capital loan capacity of the company is good, proportion of using loan/
proprietor’s asset is very high (normally above 72 %) c. Human resources - staff:
- Policy with employees: PLC pays attention to human resources factory, centered staff and employees during the development, establishment process of the Company. The Company interests in investment technical facilities,
working conditions, create best working environment for the staff so that they feel secure and attach to work for the long term in the Company, create favorable conditions for staff, employees promote their innitiates to create new value for the sustainable development of The company and for the benefits of each employee in the Company. The company implements sufficiently rights and responsibilities to employees due to regulations of the Laws.
- Genera on quantity and qualification of staff, employees of PLC Company : Petrolimex has rather high qualification human resources (regarding training and qualification),team of leaders, managers, experts with graduated and post graduated qualification occupy more than 52,76%.
d. Distribution system: Lubricants and Grease products of PLC are consumed through 4 main distribution channel systems, in which PLC company is running 2 distribution channels of most special advantage in comparison to other opponents in Vietnam’s market which are export and Petrolimex general agent channel.
- Petrolimex general agency channel with more than 5.500 petrol and gas outlets of Petrolimex is located nationwide. Its location is convenient, creating commercial advantage, having large enough scale to make profit and above all, Petrolimex outlets give priority for consumption of Lubricants and Grease products of PLC as those products are also products of Petrolimex, moreover Petrolimex general agents are assigned by Petrolimex to consume Lubricants and Grease products of PLC just like to consume oil and petrol…
- Lubricants and Grease export channel: being former 26th member of ELF (today known as Total Elf Lubricants) operating globally in marine lubricants, PLC cooperates with Total Elf Lubricants to make up marine lubricants to supply to domestic markets and export a remarkable volume of lubricants and grease to regional countries. Up to date, PLC nearly becomes the sole
enterprise manufacturing lubricants and grease products to export to foreign countries and is preparing to participate in trading base oil in regional markets…
e. Model, organizational and operation structure of PLC:
- Being equitized, operating in accordance with Enterprise Law in 2005, PLC is active in exploiting and mobilizing internal resources, flexible and prompt in face of changes in market mechanism to promote development of the enterprise. Management mode of joint stock companies has been changed, transparent, dynamic and has better supervision. Leadership of joint stock companies can bring into full play of their ability, competence in seeking for development opportunities…
- PLC’s share is listed in Hanoi Stock Exchange. This is a favorable perquisite for the company to easily mobilize capital from securities market to increase equity to meet business requirements and development investment.
As having been listed, PLC must establish, operate its internal management system according to advanced standards set put forward by securities market
making contribution to improve competitive competence of PLC:
Petrolimex’s shares accounts for vast majority in PLC. PLC will continue to have specific advantages in comparison to opponents in Vietnam as OLC has advantages in contracts with governmental agencies as it had once been a
“State company”.
- Re-structure organization and operation of PLC according to model of parent-subsidiary companies, in which parent company is PLC (focus on manufacturing and trading lubricants and greases and capital investment), 2 subsidiaries, 100% capital of which is owned by PLC and each company focuses on manufacturing and trading asphalt and chemical products each field will be more deeply intensive, to better exploit strength and potentials of each field, to improve competitive competence and thus to promote efficiency
of manufacturing and business of each company as well as of the whole system.
f. Position and market relationship, trademark in manufacturing and business lubricants and greases of PLC:
- PLC has been having advantage as one of leading enterprises in Vietnam in manufacturing and doing business in lubricants and greases; accounting for a remarkable market proportion in Vietnam’s market and step by step to expand export its lubricants and greases to regional market. With scope and its influence sphere, PLC is striving to maintain and develop traditional and good relationships with domestic and international customers. This is practical and PLC has been exploiting this advantage efficiently. PLC has been assessed as a prestigious and competent enterprise and it implements its business activities according to a methodical, professional and synchronizing process following value series of operation phases and movement lines of products.
- With awareness of critical and decisive role of importing main materials in total efficiency of the whole manufacturing and business of lubricants and greases, PLC always cares for expansion and improvement of relations of mutual benefits with many main material suppliers in the region as well as in the world…
- On the basis of P letter trademark of Petrolimex, the label lubricants and greases of Petrolimex – PLC have step by step confirmed its position in manufacturing and business market of lubricants and greases and in awareness of Vietnamese customers. This partly thanks for quality of products and service of PLC which have met requirements of customer. And also prestige and image of P letter has become belief of consumers. However, establishing the trademark of lubricants and greases of Petrolimex – PLC is a long process in attachment with protection for this trademark.
3.3.2 Some core competence to create sustainable competitive advantage for
PLC in lubricants and greases business:
We can be aware and evaluate some core competence of the Company as follows:
- PLC has established 2 factories making up lubricant oil of favorable conditions and wharfs at convenient location for receiving base oil freight of height weight, which helped PLC to import big batches of main materials and thus has low costs through scope advantage. Moreover, these two factories are located at top and bottom location of our country (Hai Phong and Ho Chi Minh city), belonging to 2 core economic zones of Northern and Southern so it is not only near great consumption markets to increase productivity and market proportion, but it also plays a decisive roles in decreasing transportation costs (a greatest cost item of PLC) as it make use of water way transportation
The special point of this “rare” of this competence is that; up to date, among many companies manufacturing and doing business in l lubricants and greases in Vietnam, PLC is the sole company having 2 factories of such favorable locations.
This point which is “difficult” to be imitated is that: opponents cannot find a convenient location to construct its factory as there is no space or if any it cannot gain low investment costs like of PLC (expense for buying land and leasing land is high)…
- Special distribution system of Petrolimex general agents with more than 1.600 oil and petrol outlets belonging to member companies of Petrolimex (among total more than 5.500 outlets of Petrolimex nationwide): as those outlets were developed in the past, those outlets often get convenient positions for trading petrol, oil and grease in localities nationwide. This distribution system is precious is because: PLC does not need to spend remarkable resource to construct and develop as they are almost “available”
for PLC; Moreover, in all cases, Petrolimex outlets must give priority to consume lubricants and greases of PLC as those products are also products of Petrolimex. This system is “rare” and difficult to be “imitated” as among all enterprises manufacturing and doing business in lubricants and greases in Vietnam, PLC is the sole company owning this.
- On the basis of P letter trademark of Petrolimex, the label lubricants and greases of Petrolimex – PLC has step by step confirmed its position in lubricants and greases market and in Vietnamese people’s awareness The reason this intangible asset is “precious” is that lubricants and greases of PLC have come to the unconscious of customers, suppliers, making contribution to build up brand for lubricants and greases of Petrolimex – PLC…
3.3.3 Value series in manufacturing and business of lubricants and greases of PLC:
a. Just like other industries, main value series (such as internal logistics, manufacturing and making up, external logistics, marketing and sales, customer service) and supporting activities (such as R & D, human resources management, infrastructure of enterprise) in manufacturing and business of lubricants and greases in Vietnam make specific contributions (direct/indirect, more or less…) to the process of creating added value for enterprises.
b. The main activities in the value chain that have significantly affect the pursuing the strategy “Cost – Leadership” of the PLC:
b1. Inside logistics including the handling of main materials (base oil, additives) and the auxiliary materials (drums, plastic cans ...) to ensure:
sufficient quantity, right quality, timely for the two lubricant blending plants in Hai Phong and Ho Chi Minh City; neatly arranged in the warehouse, outside the yard; regularly inventory to accurately determine inventory ...
make basis for the production of lubricants at the two plants are continuous, contributing to raise capacity, reduce transportation costs within the plant
Contribute lowering production costs to create more value.
b2. Production and blending at two plant, PLC Company has:
- Invest to improve the capacity of the blending tanks from 1.5 m3 to 5 m3, thereby increasing the capacity of blending; increase the capacity of the line making cans; new investment line making barrels … reducing the fix costs per product unit.
- Transfer heating furnace from the far location to the location near the blending tank saving cost of heating fuel for blending lubricants.
- Invest the automatization system to serve: determine quantity, types of main materials input and output products; measuring the technical parameters such as temperature, mixing ... in the blending processes ensure lubricant products blended according to the quality standard Customer evaluation are higher, thus the Company PLC has the ability to make a higher sale price.
- Automatization also contributed to increased blending capacity make the number of products produced in a shift up reduce the production costs per product unit.
b3 Customer services: For PLC, we should emphasize the creation of value of customer service activities: before sale services (such as training, customer training about knowledge of commercial lubricants, recommended types lubricant to use ...), after sale (such as samples of used oil to recommended oil change period …) create awareness about the value of "outstanding" in mind to customers through greater understanding, more comprehensive about PLC products by being more excellent services contributing to increased sales volume reduce costs per unit of product produced.
Recognizing the importance of customer service stage so in the organizational structure of the PLC, the company has arranged a division specializing in technical services for customers to incrementally improve the efficiency of the process.
b4 Outside Logistics :
- The formulation and handling of customer orders are implement according to the process in the quality management system standard ISO 9001:2008 Helping PLC reasonably arranged lubricant products in stock at the factory, warehouse, point of sale accordance with customer needs Contribute to reducing transport costs of products and goods. Simultaneously increases the flow of inventory Reduce storage costs per a unit of product ...
- Transportation: on the basis of rational organization of the stage of making and process orders; the lubricants ensuring department in head office of PLC and the Planning units in two plant have conditions for a reasonable balance between outsourcing and company’s transport; enhance the transport block, and increase the load factor of vehicles using PLC can save on transport costs products.
b5. Marketing and Sales:
- Recently, the company has gradually enhanced the stage of company image advertising, brand promotion DMN Petrolimex – PLC increase the value that customers are aware of the DMN PLC products. On the other hand, this stage also make a good impression about the quality of products and services of company in the minds of customers Contribute to increased lubricant consumption, reduced costs per unit of product. Thereby adding value to the company.
- Based on the organizational model is structured towards specialization and uniform from company to its branches, with the Division / Department specialist in charge of each segment customers / distribution channels: a Petrolimex general agent, cans and boxes, industrial customers, Marine Lubricants Company and conditional branches to strengthen the relationship, understanding the exact needs of clients using lubricating oil production in each sector, each region and each locality; introduce, guide,
recommended use, negotiating, signing and implementation of sales contracts and also held a number of sales promotion activities increase the output of PLC lubricants are consumed Contribute to lower costs per unit of product (mainly fixed costs) increase value to the company.
- With four major distribution channels including a Petrolimex general agents (mainly through consumption of lubricant oil cans and boxes), agents distributors, sales agents outside Petrolimex (mainly through consumption of lubricants Oil cans and boxes), Direct Sales (mainly selling lubricants for industrial customers, sales of marine lubricants), exports (mainly of marine oils and grease) are organized by PLC towards the dynamic, flexible, satisfactorily resolved the relationship between the interests of the channels, creating a driving force for the distribution system to satisfy customer needs better between the interests of the channels, creating incentives for distribution system better meet the needs of customers. Through a system of distribution channels nationwide, PLC has the ability to meet demand for lubricant and grease products for diverse customers Help the company keep customers, market share, stable and increased annual consumption of lubricants and greases Reduced costs per unit of product (mainly fixed costs) increase value for the company ...
Particularly with special distribution systems - the Petrolimex General agents, previously developed by often occupy positions favorable for petrol, oil and grease in localities nationwide. PLC do not spend resources to build and develop as close as is "available" for the PLC. Moreover, in all cases the priority of filling stations must be a consumption of products lubricants and greases PLC because it is also the product of Petrolimex Since then the PLC can save investment costs for developing a distribution system. At the same time the distribution system will also help stabilize PLC, increased
output is consumed lubricants and greases Reduced costs per unit of product.
c. Support activities in the value chain to influence pursuing the "Cost - Leadership" strategies of the PLC, which includes:
c1. Sales:
- Stage of the import of raw materials (base oil, additives) are playing a big role in implementing the strategy Cost - Leadership of the PLC. Therefore, the company has enhanced the traditional relationship, a long-term mutually beneficial to large firms and also focus on developing more new suppliers in the region and the world specialized in supplying raw materials main PLC guaranteed source of raw materials in large quantity, stable quality and timely progress. Furthermore, as is one of two manufacturing units where the number of imported materials is largest in Vietnam PLC usually get an import value of raw materials unit is quite reasonable Important contribution to reducing costs per unit dispensing lubricant products PLC.
- Stage of procurement of other materials: the development c2 Research and Development (R & D):
- Recently, the PLC has been focused on the design and selection of subcontractors with sufficient capacity for processing and renewal of small plastic containers, stamps, labels for sewing closed lubricant cans pouring box
From that initially attract customers lubricants and greases increased output cans and boxes Reduced costs per unit of the lubricant boxes and cans.
- Sewing research, developing new products, upgrade existing products is also concern PLC and has achieved initial results PLC may step down
"covering" the needs of customers, markets create high-quality products, initially penetrated segment of high quality lubricants sold at higher prices