INTRODUCTION 2 1. Vinamilk background 2 2. Vinamilk market size and market growth 2 3. Mauritius business environment 4 4. SWOT Analysis 4 CHAPTER I: BUSINESS ENVIRONMENT RESEARCH 5 1.1 Political environment 5 1.2. Economic environment 6 1.2.1. General economic environment 6 1.2.2. Dairy industry environment 7 1.2.3. Sociocultural environment 7 1.2.4. Legal environment 8 CHAPTER II: COMPARATIVE STRATEGY AND MODE OF MARKET ENTRY 9 2.1. Competitive strategy 9 2.2. Mode of market entry 10 CHAPTER III: ESTIMATED PROFIT AND GROWTH 12 3.1. Vinamilk’s pricing strategy: 13 3.2. Vinamilk’s marketing strategy: 13 CONCLUSION 13 REFERENCES 15 INTRODUCTION 1. Vinamilk background Founded in 1976, with a mindset of creativity, innovation, and permanent efforts, The Vietnam Dairy Products Joint Stock Company (Vinamilk) has grown to become one of the biggest corporations in Vietnam after 45 years of establishment and development. Vinamilk has constantly contributed to the development of the country in general and of the dairy industry in particular, elevating Vietnam’s dairy products in the global market. Celebrating 45 years of establishment in 2021, Vinamilk not only becomes the top and leading dairy company in Vietnam but asserts its brand position on the international map.
Trang 1FOREIGN TRADE UNIVERSITY SCHOOL OF ECONOMICS AND INTERNATIONAL BUSINESS
-□□□□□ -MID - TERM REPORT Subject: INTERNATIONAL BUSINESS
Topic: BUSINESS PROJECT OF VINAMILK IN MAURITIUS
Group
Class: KDOE307
Lecturer: Assoc Prof Dr Phan Thị Thu Hiền
Hanoi, June 2023
Trang 2TABLE OF CONTENTS
INTRODUCTION 2
1 Vinamilk background 2
2 Vinamilk market size and market growth 2
3 Mauritius business environment 4
4 SWOT Analysis 4
CHAPTER I: BUSINESS ENVIRONMENT RESEARCH 5
1.1 Political environment 5
1.2 Economic environment 6
1.2.1 General economic environment 6
1.2.2 Dairy industry environment 7
1.2.3 Socio-cultural environment 7
1.2.4 Legal environment 8
CHAPTER II: COMPARATIVE STRATEGY AND MODE OF MARKET ENTRY 9
2.1 Competitive strategy 9
2.2 Mode of market entry 10
CHAPTER III: ESTIMATED PROFIT AND GROWTH 12
3.1 Vinamilk’s pricing strategy: 13
3.2 Vinamilk’s marketing strategy: 13
CONCLUSION 13
REFERENCES 15
Trang 31 Vinamilk background
Founded in 1976, with a mindset of creativity, innovation, and permanent efforts, The Vietnam Dairy Products Joint Stock Company (Vinamilk) has grown to become one
of the biggest corporations in Vietnam after 45 years of establishment and development Vinamilk has constantly contributed to the development of the country
in general and of the dairy industry in particular, elevating Vietnam’s dairy products in the global market Celebrating 45 years of establishment in 2021, Vinamilk not only becomes the top and leading dairy company in Vietnam but asserts its brand position
on the international map
In Annual Report 2020, Vinamilk has pointed out 5 core values including that directs all activities, behaviors, and decisions of Vinamilk:
+ INTEGRITY (Integrity and transparency in all actions and transactions)
+ RESPECT (To have self-respect, respect colleagues, respect the Company and partners, and cooperate with respect)
+ FAIRNESS (To be fair with employees, customers, suppliers and other parties) + ETHICS (To respect the established ethical standards and act accordingly) + COMPLIANCE (To comply with legal regulations and the Company’s Code of Conduct, rules, policies and procedures)
With the vision “to become a world-grade brand in food and beverage industry, where people put all their trust in nutrient and health products” and the mission “to deliver the valuable nutrition to community with our respect, love and responsibility”,
Vinamilk provides customers with the nutrition solution with international standards that satisfies their needs with delicious products with various product lines such as: Vinamilk fresh milk, Vinamilk yogurt, condensed milk, Baby food, etc and, powdered milk is one of the most leading and outstanding products Vinamilk has demonstrated
a strong spirit of constant innovation, improvement, and seeking out new directions in order to make the company stronger and stronger in the market
2 Vinamilk market size and market growth
In recent years, Vinamilk has made an impressive development and become one of the biggest corporations in Vietnam, and now continues to make constant efforts to
Trang 4conquer international markets, approaching its goal to be positioned as one of the 50 biggest dairy
companies worldwide After more than 45 years of establishment and development, from 3 small factories at the beginning, Vinamilk has now expanded its scale to 46 subordinate units, consisting of 1 headquarter, 5 branches, 16 factories, 14 dairy farms, 2 warehouses, 8 subsidiaries and affiliates in Vietnam and over the world
According to Euromonitor, the Vietnamese dairy market reached a value of 135 trillion Vietnam dong in 2020, representing a growth of over 8% compared to 2019 This growth can be attributed to the rapid expansion of the yogurt and fresh milk segments
Figure 1.2.1: Vietnamese dairy market experienced stable growth in both volume and
value from 2016 to 2020
Fresh milk segment is the most significant contributor to the value of the dairy industry in Vietnam, encompassing popular brands such as Vinamilk, Moc Chau milk,
TH True milk, Dutch Lady, and Nutifood Among them, Vinamilk currently holds the largest market share, with 40% of the total value of Vietnam's dairy market
Trang 5Figure 1.2.2: Fresh milk market in Vietnam in 2020
In recent years, Vinamilk has made an impressive development to become one of the biggest corporations in Vietnam, and now it continues to make constant efforts to conquer international markets, approaching its goal to be positioned as one of the 50 biggest dairy companies worldwide According to the rankings announced by UK-based Plimsoll Publishing Ltd on April 20, 2021, the company climbed to the top
40 world dairy producers with the highest turnovers (The UK-based Plimsoll Publishing Ltd)
3 Mauritius business environment
Based on our research, Mauritius is a country that has a very healthy and functional economy, though not without its trouble in the form of high inflation and unemployment We believe this can be a good place for a foreign business to expand into due to some considerable advantages to Vinamilk in cultural, economic, and political environments Therefore, the purpose of this report is to point out and explain the facts and statistics that we think would make this country a good place to build and staff the factory
4 SWOT Analysis
- Strengths:
+ Vinamilk’s strong financial growth over years making it the most valuable brand in Vietnam
+ Increasing and diversified Vinamilk’s product lines
+ Using international standards and advanced technology in manufacturing helps Vinamilk maintain the hygiene and quality
products
Trang 6- Weaknesses:
+ Imported materials (from Sweden and G7 countries of Europe)
+ Negative Press - Rumors have always surrounded Vinamilk regarding the various products but none of them has been proven to date
- Opportunities:
+ Growing demand for dairy products with a growing middle-class population and increasing disposable income in Mauritius
+ Taking advantage of Mauritius’s beneficial natural conditions
+ Mauritius’s limited domestic production: Mauritius has limited domestic production of dairy products, which makes it reliant on imports
+ Health-conscious consumer trend in Mauritius
- Threats:
+ Difficulties in the supply chain since Mauritius is an island nation
+ Cultural preferences and taste preferences in Mauritius
+ Lacking some factors in raising cows in Mauritius
We use SWOT analysis to assess Vinamilk’s internal and external factors, as well as current and future potential in order to evaluate its competitive position and to develop strategic planning when Vinamilk first enters the Mauritius market
CHAPTER I: BUSINESS ENVIRONMENT RESEARCH 1.1 Political environment
Mauritius operates in the framework of a multi-party representative parliamentary democracy, in which the President serves as the Head of State and the Prime Minister Head of Government Legislative power is vested in both the Government and the unicameral National Assembly
Mauritius is the only African country classified as a “full democracy” by Democracy Index in 2022 and is consistently ranked first in good governance by the Ibrahim Index of African Governance Moreover, in terms of corruption, Mauritius also has a somewhat good record, especially relative to African countries, as it scores 54/100 in the Corruption Perception Index and is ranked 49th out of 180 countries
Trang 7Overall, Mauritius has a peaceful, stable, and functional political environment with good governance, which makes it stand out not just among African nations, where the aforementioned traits are a rare occurrence, but among all countries in the world
as well
1.2 Economic environment
1.2.1 General economic environment
Since independence from the British in 1968, Mauritius has transformed from a low-income and agriculture-based to a high-low-income and diversified country based on tourism, textiles, sugar, and financial services Such is the success of Mauritius that was dubbed “the Mauritian miracle” and “the success of Africa”
In 2022, with a population of 1.26 million people, Mauritius has a GDP of US$11 billion, which places it in the middle of African countries; however, it boasts a GDP per capita of US$9.111, placing it in the upper tier, with the World Bank considering it
to be a high-income country For most of the period, Mauritius has sustained a growth rate of roughly 4%, which is notable compared to sub-African countries and other developed countries However, the COVID pandemic had the impact of delivering a negative growth rate of -14.9% in 2020, though growth has been positive since 2021
Regarding its other data, Mauritius experienced a high inflation rate of 10.8% in
2022, and until April 2023, when inflation decreased to about 9%, it maintained a double-digit inflation rate Unemployment lies around 7.66%, which is moderately high; while the Mauritian Central Statistic Office estimates labor productivity to be 102.30 points in 2021, and wage is at US$821.69 per month Its Gini coefficient, which measures income inequality, lies at a medium figure of 36.8
Corporate tax in Mauritius ranges from 15% to 17%, while the individual tax is from 10% to 25% The country also offers tax holidays and incentives in specific sectors However, Mauritius is also a noted tax haven
Overall, the data shows that Mauritius has a very healthy and functional economy, though not without its trouble in the form of high inflation and unemployment This can be a good place for a foreign business to expand into
Trang 81.2.2 Dairy industry environment
On paper, Mauritius is gifted with geographical and economic elements advantageous to the development of the dairy industry, including a pristine and clean environment free of major tropical animal diseases, and continuously rising demand from both locals and tourists Moreover, increasingly common heavy rain means that there is no shortage of grass for the industry
In reality, Mauritius’ milk production has steadily decreased and is projected to drop 9.7% per year, from 2,100 metric tons in 2021 to 1,200 in 2026 The country also only ranks 172nd in terms of milk production The country heavily relies on import for milk, with import accounting for 95% of milk consumption
There are several reasons for this underdevelopment of the milk industry in Mauritius Firstly, production cost plays a major factor, as breeding cattle for milk requires expensive land, buildings, special machines, etc., and animal feeds are imported because Mauritius has no fodder collection industry Secondly, the market
is limited, as while locals are fond of powdered milk, they have no such attachment to fresh milk, and the government has no effective marketing campaign or an effective distributing system to solve the issue Thirdly, veterinary service, though free, is constrained by a lack of veterinarians Fourthly, many breeders are grouped into cooperatives, but cooperatives can be inefficient and suffer financial difficulties
That said, there have been promising signs in the industry in recent years The sector has received major investments, with projects such as Golden Cream Ltd and SKC Surat, and a biotechnology park from the Indian company Aadicon Biotechnology Ltd The joint FAO/IAEA Division has also been assisting Mauritius in increasing its research capacity to make its dairy industry more competitive through local production, utilization of by-products of the sugar industry and lands available due to the decline in sugar cane production
1.2.3 Socio-cultural environment
Mauritius is a multi-ethnic, multi-language, and plural society with four major religions (Hinduism, Christianity, Islam, and Buddhism), in which Hinduism is practiced by a majority of people Secularism is the official government policy, with religious
Trang 9guaranteed Religious public holidays are the Hindu festivals of Maha Shivaratree, Ougadi, Thaipoosam Cavadee, Ganesh Chaturthi, and Diwali; the Christian festivals
of Assumption and Christmas; and the Muslim festival of Eid al-Fitr
The official language of Mauritius is English, a legacy of British colonialism; yet aside from usage in official documents and communications, as well as in tourism, English
is rarely used daily Instead, the business and social aspects, as well as the media, and literary expression are dominated by the French language, no doubt a strong mark left behind by the presence of French settlers French is also associated with high culture, which is another reason for its more frequent usage
The island of Mauritius had no indigenous population, and was historically characterized by waves of European colonization and multiple immigration of Indian and Chinese The coexistence of Mauritian Indian, African, European, and Chinese led to a sharing of values and culture, collective participation in festivals, and increased understanding between people of different ethnic backgrounds That said,
it is also unpopular to encourage the dissolution of cultural boundaries, as Mauritians from different cultural backgrounds are very distinct
1.2.4 Legal environment
The legal system of Mauritius is a hybrid one, derived from both British common law and French civil law The system in Mauritius is adversarial and the Supreme Court has held that the rules of evidence are derived from an adversarial model of justice Litigations can be settled either via out-of-court arbitration and mediation, or court-mandated commercial litigation or mediation
The country has a solid reputation in terms of legal practice through a strong legal and regulatory framework in compliance with international demand for greater transparency The country is also a member of multiple investment protection treaties, non-double taxation treaties, as well as anti-corruption treaties such as the Convention on Mutual Administrative Assistance in Tax Matters and the Eastern and Southern Africa Anti Money Laundering Group Mauritius also has a system of automatic information exchange to combat tax and financial crimes through the Common Reporting Standard and the Foreign Accounts Tax Compliance Act That said, there are still instances where the enforcement of laws is co-opted by nefarious
Trang 10actors for political or other purposes.
CHAPTER II: COMPARATIVE STRATEGY AND MODE
OF MARKET ENTRY 2.1 Competitive strategy
As assessed from the above analysis of the business market and the decision of acquisition to enter the Mauritius dairy market, it is recommended that a Multi-domestic strategic approach should be used, and the key product used for targeting the market is powdered milk to best suit this market
When entering Mauritius’ dairy market, it is essential to notice the differences between the business environment and consumer product preferences Regarding Mauritius's dairy industry environment, Mauritius's domestic dairy products are considered to be underdeveloped due to the lack of promotion in consumption from the government for the dairy industry and the shortage of animal feeds This is contrary to the Vietnamese dairy industry since this is seen as one of the most potential industries in Vietnam, with over 200 dairy producers, along with fast-growing milk consumption per capita of 28 liters in 2021 This poses a challenge for Vinamilk to discover a more profound way to enter Mauritius’ dairy market by raising awareness through marketing activities and optimizing the production process to utilize the natural resources best, the available supply chain, and the regulatory framework here
Besides the fundamental differences in the business environment, Vinamilk should also understand Mauritians’ preferences in consuming dairy products The most popular form of milk consumed by Mauritians is powdered milk According to the Dairy Regional Trade Policy Paper, September 2004, among the COMESA countries, Mauritius is the country where most dairy is consumed for powdered milk Powdered milk in Mauritius is usually sold in large packages weighing approximately 1kg It is used for many purposes by Mauritians, not only for primary household consumption
as an alternative to fresh milk and an essential ingredient in a wide range of dishes such as baked goods and desserts On the other hand, most of the products within the powdered milk line of Vinamilk serve more niche usage purposes and consumers, such as Vinamilk Optimum Gold, Dielac Grow for children, or Optimum