(TIỂU LUẬN) GLOBAL BUSINESS STRATEGY group assignment report on a business strategy

v Overview of the product Since we understand thoroughly the demand of having absolute stainless dishes, our company has come up with the brand new idea of a sterilization kitchen cupbo

NATIONAL ECONOMICS UNIVERSITY

SCHOOL OF ADVANCED EDUCATION PROGRAMS

~~~~~~*~~~~~~

GLOBAL BUSINESS STRATEGY

Group assignment: Report on a business strategy

Lê Hà Anh (11190166) Phạm Nguyễn Ngọc Mai (11193310)

Đào Lan Nhi (11193964)

Nguyễn Thị Minh Châu (11190777) Nguyễn Hương Trà (11195154)

HÀ NỘI – 2022

TABLE OF CONTENTS

PART A 1

1.Our company 1

2.External environment 4

PART B 18

1.A global standardization stategy 18

2.Market 17

3.Entry strategy 23

PART C 26

1.The new industry: kitchen utensils and appliances 26

2.Justification for diversifying by using the five forces model 27

3.Approaches to diversifying into a new industry 28

4.Strategic fit along the value chain 28

REFERENCES 30

Delicants Foundation is a furniture company, so our second aim is to bring a delicate decoration to your kitchen and turn it into a true home

v Overview of the product

Since we understand thoroughly the demand of having absolute stainless dishes, our company has come up with the brand new idea of a sterilization kitchen cupboard

The cupboard is only a fine decoration to your kitchen but also a convenient tool to sterilize bowls, dishes, cutlery and other kitchen tools which involve in cooking

- Flow meters for water; medical gases; medical compressed air and vacuum; and hydraulic circuits

- Particulate air meter for monitoring the quality of treated air atmospheres with ventilation systems or conditioned air and other isolated areas

- Thermometers or thermocouples for temperature measurement of air, water, and steam at specific points inside equipment or systems

- Chronometers to measure cycle times

- Chemical products for cleaning, disinfecting, and sterilizing surfaces of equipment

- Electrical safety analyzer

Our products vary in a wide range, the customers can create their own and unique products by customizing them which fit their home best

v Delicants business model

• Customer segments

- A mass – market business model is what Delicant aims for because the products have a wide price range, size and quality that can satisfy all customer segments

• Value proposition

- The mission of the company: We offer Technology to customers who

care about their health in not only the Covid 19 pandemic but afer that as well,

to have a clean living environment

- Specialized products: Disinfection machine with the ability to sterilize

the kitchen tools and disinfect bacteria for tools before use

- Scope of the market: Diversification of products is family – friendly and

prioritizes the domestic market during Covid

• Customer relationships

- Delicant’s customer relationship is primarily of a long-term nature

Customers buy and use our products, they will be consulted and taken care of

as well as receive other benefits when purchasing The company’s website provides answers to frequently asked questions and email support for customers’ needs Delicant will provide a warranty for a long time to customers

• Revenue stream

- Income: Selling the products to customers

- Outcome: Spending on manufacturing, marketing, labor force, taxes, contingency cost and distribution until the product goes into customer's hands

• Key resources

- Delicant’s main resources are its human and physical resources We

set up different groups to research and operate the machines to best suit the requirements of our customers and together we are toward the goal of building the best products to protect the health of consumers in this epidemic period

• Key activities

- Delicant’s business model entails are manufacturing the best products for customers and taking care of all customer’s demands and pleasing them with good services Moreover, factories, trucking, materials, warehouse are also important parts that help produce high-quality products that Delicant focus on

- Delicant cooperates with the factory to manufacture and distribute products safely and conveniently which helps save the expenditure on production and shipping for the company

- Retailer chains: The retailers will carry goods from the company and distribute genuine and completely independent products

- 20% cost for manufacturing

- 50% cost for sales and advertising

- 30% cost for labor forces

o Phase 2 (growth)

The product is widely known and has been consumed more in the market, the demand of customers will increase so Delicant will focus on production and development:

- 50% cost for manufacturing

- 20% cost for sales and advertising

- 30% cost for labor forces

o Phase 3 (stability)

Delicant has owned loyal customers, the sales volume is stable, Delicant will start to conduct research and development on new products

- 50% cost for manufacturing (30% for R&D)

- 20% cost for sales and advertising

- 30% cost for labor forces

on packaging and labels for electronic and electrical household products

This is the basic as well as shaping for Delicants in building the image and brand of the product Sterilization of kitchen cupboard products ensures technical standards as prescribed by law

• Economic

Since 1986, Vietnam has consistently innovated, adopted economic and political strategies, and evolved into a low-middle-income nation that is no longer backward, rather than a poor country complaining In recent years, there have been complex worldwide variations Vietnam, on the other hand, has

1.82 percent in 2020 (due to the negative impact from the COVID-19 epidemic) However, in comparison to other nations in the area, Vietnam's economy has been highly praised and steady in recent years, owing to its strong growth rate

Various nations have implemented social isolation measures, limited many activities, and forced many industrial companies to temporarily close as a result of the Covid-19 epidemic, all of which have had a significant impact on consumption a significant reduction However, by implementing excellent illness preventive and response measures in response to Covid-19, Vietnam has been able to stave off a severe economic downturn Vietnam's economy was severely impacted by the COVID-19 epidemic as a result of its deep economic integration, but it also demonstrated remarkable resilience If Vietnam successfully stops the spread of the virus, the economy is expected to increase

by 5.64 percent in 2021 At the same time, export-oriented manufacturing industries fared well, and domestic demand recovered quickly

During the pandemic, consumers began to be more strict with consumables, careful selection, sure for a good product as well as a reasonable price, can achieve satisfaction Sterilization of kitchen cupboard products is not only an opportunity to prove to consumers about product quality and reasonable prices but also a challenge to products during this time

• Social

The population of Viet Nam is around 98 million people, with an average age of 32.9 years and 37.34 percent of the population residing in urban areas, according to UN figures As a result, Vietnam has a sizable share of the working-age population The country's predominant religion is Buddhism, and its primary language is Vietnamese Men have a 93-year life expectancy, while women have an 81-year life expectancy The country's middle and upper classes are fast expanding, and their members tend to travel more than in earlier decades

This is a great opportunity for Sterilization of kitchen cupboard products to get closer to customers

• Technological

Sterilization refers to a process that eliminates or kills all pathogens using various technologies and methods that are applied for sterilization of

equipment and medical devices in the healthcare infrastructure There is an increase in the demand for sterilization technologies across the globe Patient safety and the prevention of hospital-acquired infections being a major concern lead to an increase in the demand for sterilization technologies in the healthcare sector The sterilization technology market is driven by the increasing occurrences of hospital-acquired infections, increasing number of surgical procedures, growth in pharmaceutical and biotechnology industries, and rising technological advancements in sterilization equipment However, the stringent regulatory framework could hamper the growth of the market during the forecast period

The global sterilization technology market is expected to reach a market value of USD 8,142.61 million by 2023 from USD 5,074.58 million in 2017 at a CAGR of 8.20% during the forecast period from 2018 to 2023 In 2017, the Americas held the largest share of the market at 40.1%, followed by Europe and Asia-Pacific with shares of 34.4 % and 17.48 %, respectively The global sterilization technology market has been segmented based on process, type, end user, and region By type, the global sterilization technology market has been classified into ethylene oxide, ionizing radiation, filtration, thermal sterilization, and others Based on process, the global sterilization technology market has been categorized as chemical process, physicochemical, synergetic process, and physical process By end user, the global sterilization technology market has been segmented into hospitals and clinics, the pharmaceutical industry, and medical device manufacturers

As a product of Delicant, using advanced sterilization technology combined with heating ventilation and air conditioning systems, Sterilization of kitchen cupboard is the perfect solution, suitable for disinfecting, sterilizing surfaces of equipment and for daily cooking at home

electronic items to the list of Group 2 commodities that must be controlled for safety and electromagnetic compatibility, according to QCVN 9:2012/BKHCN The standard for assessing safety for household electrical and electronic equipment is the IEC 60335 Household and similar electrical appliances – Safety set of standards

This set of standards has been uniformly applied worldwide, most countries have translated this set of standards into national standards Vietnam has translated the IEC 60335 series of standards into the Vietnamese standard TCVN 5699

• Environmental

Vietnam is a sovereign and autonomous country with 54 ethnic groups Despite their disparities in regional identity and culture, the brothers' most striking common ground remains patriotism, familial love, and national unity When customers' attitudes and worries about origin are another component that substantially contributes to the growth of Vietnamese consumers, this is also a factor impacting their purchasing behavior Domestic businesses prioritizing support for national products "made in Vietnam" have developed a significant resonance effect among the Vietnamese people, instilling national pride The reality is that environmental contamination is growing increasingly severe across the world, prompting consumers to become more conscious of their own purchasing habits in order to help safeguard the environment

v Porter’s Five F orces

• Threats of new entrants

Economies of scale are quite difficult to achieve in the furniture industry This makes production costs more expensive for new entrants

Product differentiation occurs strongly in industries, where companies in the industry sell differentiated products instead of a standardized product Customers also look for differentiated products

Capital requirements in the industry are high, making it difficult for new entrants to set up a business due to the high costs involved Capital expenditure

is also high due to high R&D costs This makes it difficult for new entrants to the industry

The potential of Vietnam's kitchen equipment industry in the coming time

is highly appreciated According to the data of the Ministry of Industry and

Trade, consumption in the kitchen equipment industry accounts for 9%, a potential market that makes many domestic and foreign kitchen equipment enterprises also have the desire to join With easy access to distribution channels, new businesses can easily get products onto shelves through just a few retail stores that sell home appliances

Government policies in the industry require regulatory requirements: Strict licensing and regulatory requirements must be in place before a company can start selling

Therefore, the threat of new entrants is low

• Bargaining Power of Suppliers

The number of suppliers in the industry in which Delicants does business

is much greater than the number of buyers This means suppliers have less control over pricing

The products these vendors offer are fairly standardized, have little differentiation, and have low switching costs This makes it easier for buyers like Delicants to switch suppliers

Suppliers do not compete with other products in this industry This means that there are no substitutes for the product other than that provided by the suppliers

Vendors do not provide a credible threat to future integration into the industry in which Delicants operates

The industry in which Delicants operates is an important customer for its suppliers This means that industry profits are closely tied to suppliers' profits Therefore, these suppliers must offer reasonable prices

Therefore, the bargaining power of suppliers is relatively low

• Bargaining power of customers

The market is quite rich, consumers have many choices

Buyers are well informed about the product offerings of sellers (product features and quality, prices, buyer reviews) and the cost of production (an indicator of markup) The more information buyers have, the better bargaining position they are in The mushrooming availability of product information on the Internet (and its ready access on smartphones) is giving added bargaining power to consumers, since they can use this to find or negotiate better deals

Up to 50% of the Vietnamese population is under 30 years old This generation of young, educated and tech-savvy consumers tends to be open to new technology, and investing in modern, convenient, family-friendly appliances

is an all-time choice weak for them

Covid-19 makes a big change in living habits According to a survey by Nielsen Global Connect, a global data analysis and measurement company, up

to 62% of Vietnamese people said they would eat at home more often instead

of going out to eat, even after Covid-19 ended Delicants are closely associated with people's daily lives, essential and high-quality equipment

Customers are quite price sensitive, as they have the right to bargain and buy competitors' products

Therefore, the bargaining power of customers is moderate

• Threat of substitutes

Faced with many new products that are better in performance, features, ease of use and lower prices Delicants are forced to innovate and upgrade continuously to meet customer needs and expand the market

The costs that buyers incur in switching to the substitutes are low Low switching costs make it easier for the sellers of attractive substitutes to lure buyers to their offerings; high switching costs deter buyers from purchasing substitute products

Therefore, the Threat of Substitutes of customers is moderate

• Competitive rivalry

Mordor Intelligence forecasts that the period 2020 - 2025 will be a boom year for the kitchen furniture segment in the Vietnamese furniture market The kitchen furniture segment includes kitchen appliances and other wooden furniture The reason for the rise of the kitchen furniture segment, analysts have based on the increase in urbanization and kitchen remodeling as well as the strong investment from the hotel industry units, manufacturers goods due to the development of tourism

Customers have strong brand preferences and high degrees of loyalty to sellers In the Vietnamese market, Delicants faces a large number of distribution, retail and manufacturing businesses Vietnamese brands account for 80% of the market share of kitchen appliances: Happy Cook, Sunhouse

(accounting for a large market share, stable growth at a high level), Nha Xinh furniture, …

Besides, there are also many foreign brands such as: Bosch, IKEA, Munchen, Electrolux (Global group from Sweden)

Buyer costs to switch brands are low Switching costs include not only monetary costs but also the time, inconvenience, and psychological costs involved in switching brands

Therefore, the competitive rivalry in the industry is high

• Conlusion

In summary, in the above 5 competitive forces, the threat from competitive rivalry in the industry is the largest Besides, it is also necessary to pay attention to the threat from buyers' bargaining

v Strategic group Map

Through research, Delicants choose to stand in the middle position of localities and prices as well as quality for those reasons below

First of all, the strategic group map displayed the different market or competitive positions that rival firms occupy in the industry mostly in low prices and many localities so Delicants found out that we need to avoid that part of the

market Because Delicants know that some strategic groups are more favorably positioned than others because they confront weaker competitive forces or because they are more favorably impacted by industry driving forces

Furthermore, if we set a high price for our product, it’s hard to compete with IKEA or JYSK when we have built customers’ trust for a long time with their reputation It also leads to a conclusion that the middle position can be more attractive and potential for us to consume our product Therefore, we would like

to go for the middle position for both

v SWOT analysis

• Strength

Monopoly: Delicants has its own monopoly on technique so the washing machine has unique and particular functions Besides, Delicants with monopoly profit can also use its profit to invest in new products and technologies

dish-Wide price range: There are various types of dish-washing machines with corresponding prices As a result, every consumer in all classes can afford

a Dilecants dishwasher

Human resources: Delicants workforce is talented, creative and trained Young and qualified employees have a good knowledge of consumers and the market They do not hesitate to face and overcome challenges and provide optimal solutions

well-Suitable with global situation: With the outbreak of the Covid 19 epidemic, the demand for cleanliness and safety is focused and concerned by many customers Understanding that situation, the disinfecting feature of the dishwasher can meet the needs of customers as well as be suitable for global situations

Inexperience: Although Delicants are young, ambitious and well-trained, they still have a lack of skills and experience to deal with Marco problems

Limited workforce: Dilecants just has nearly 20-40 employees so an employee has to work fields of stuff As a result, he/she sometimes can not handle or finish deadline on time

• Opportunities

Match the global interest: People have been interested in equipment or interiors which make their houses clean and safe during the COVID-19 pandemic Delicants’ product function -the disinfecting feature - can match the global interest

Demand for accommodation especially apartments and condominiums: The demand for housing has increased along with the demand for furniture and equipment installation Taking advantage of this, Delicants can cooperate with housing and real estate service providers to promote its products

Original dish – washing is already popular: These days, consumers pay attention and are interested in dishwashers Capturing this behavioral psychology, Delicants dish-washing machine can easily attract customers

• Threats

Be copied by stronger competitors - high price: Although Delicants is a monopoly company about the special function of dishwashers, product designs and features can still be conceptualized, imitated and developed by large and branded companies, which are familiar with the consumers

Be copied by competitors from China - low price and quality: Some China companies tend to imitate exactly their competitors’ products They also have the capability to significantly undercut prices offered by competitors over a wide range of products

Therefore, Delicants needs to concentrate on both R&D and Marketing to improve its product

• Weak brand awareness

• Lack of loyal customers

W-O

• Weak brand awareness - Inexperience - Original dish-washing is already

popular

→ Based on the existing popularity that customers have acknowledged in dish-washing machines, Delicants should focus

on the sterilization feature to add more value to it

• Lack of loyal customers

- Demand on accommodation

especially apartments and condominiums

→ Delicants should concentrates on building strong relationships among potential customers who are in demand of purchasing

accommodation

Collecting data from real-estate businesses should be considered

→ Delicants should copyright

registration for the product after the finalizing product course has been proceeded

→ Focus on R&D resources to constantly develop technology

• human resources -

be copied by stronger

competitors

→ Delicants should encourage fair bonus policy to ensure bonuses and benefits to retain workforce, maintain healthy work

W-T

• Weak brand awareness -

be copied by stronger competitors

→ In-store marketing should strongly influence the customer’s sight by holding the experience program at the distribution channels

v Competitors analysis

According to the strategic group map, the most direct competitor is Nha Xinh, which competes with price and geographic coverage

• Nha Xinh’s Current Strategy

How is the competitor positioned in the market?

Nha Xinh was established in 1999 as a furniture brand under AA Corporation It has become an icon of style and quality

Over the past decade, it has been honored to provide Vietnamese customers with a wide range of diverse and rich interior equipment

Nha Xinh always upholds the criterion of focusing on the design of novel products in order to build and strengthen the brand's top – quality standards

What is the basis for its competitive advantage?

- Nha Xinh has a variety of products The brand has introduced a new product per month

- It has qualified package service and customer's buying process: consulting, design, transportation, installation, warranty

- Customers can access detailed information and hands-on images about living spaces and interiors via Nha Xinh’s Website; Facebook; Youtube or Instagram

- It is also was known as a perennial furniture brand in Vietnam

What kinds of investments is it making (as an indicator of its expected growth trajectory)?

Currently, Nha Xinh focuses on developing a long-term and sustainable investment strategy The company invests in R&D to improve its product’s meaning and function Nha Xinh’s interiors will be made from recycled or eco-friendly materials in the near future

• Objectives

The domestic market is the "blue ocean" that Nha Xinh targets in the interior Nha Xinh brand wants to honor Vietnamese goods, target the middle and high-end segments, and be proud of manufacturing in Vietnam, with a market share of 60-70% of the domestic market