G1 00238 MARKET DEVELOPMENT STRATEGY FOR VIET FASHION CORPORATION FOR 2011-2015 CHIẾN LƯỢC PHÁT TRIỂN THỊ TRƯỜNG CỦA CÔNG TY CỔ PHẦN THỜI TRANG VIỆT GIAI ĐOẠN 2011-2015

G1 00238 MARKET DEVELOPMENT STRATEGY FOR VIET FASHION CORPORATION FOR 2011-2015 CHIẾN LƯỢC PHÁT TRIỂN THỊ TRƯỜNG CỦA CÔNG TY CỔ PHẦN THỜI TRANG VIỆT GIAI ĐOẠN 2011-2015

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

CAPSTONE PROJECT REPORT

MARKET DEVELOPMENT STRATEGY FOR VIET FASHION CORPORATION

FOR 2011 - 2015

Group number: 7 Student's name:

1 Hoang Thi Bich Hang

2 Nguyen Van Huong

3 Le Thu Hien

4 Nguyen Thi Tra Giang

S Huynh Buc Huy

6 Ha Ba Phong

HCMC 2011

INTRODUCTION

Vietnam’s economy is currently following the global integration’s trend, having Joined World Trade Organization (WTO), ASEAN Free Trade Area (AFTA), Hence, the competition is getting more and more fierce Companies in any industry have to find an appropriate way for the actual requirements and alsu to adapt itself with the

transformation of the market Hence, each company is required to improve itself to

achieve the highest efficiency, and control the production process

Market developing strategy is a tool to help business to attain proposed

objectives, plans, or adjust directions of business to comply with the unstable economic environment Vietnam Fashion Corporation is an active entity operating in the similar unstable environment In order to be active in operating, producing, grasping the consumers’ needs, forecasting and catching the business opportunity of the market, the

market developing strategy will play an important role for the companies to conform the business objectives

Realizing the importance of the market for the company, especially the output

market, we have deployed the Subject: “Market developing Strategy of Vietnam Fashion Corporation in the period of 2011-2015”

The subject is constructed into 3 sections with the following contents:

Section I: Some basic theoretical issues of marketing and market development

Section II: Current market condition of Viet Fashion joint stock company (Viet Fashion JSC) in the 2005-2010 period

Section III: Market development Strategies for Viet Fashion JSC in the 2011-

2015 period

Chapter I SOME BASIC THEORETICAL ISSUES OF MARKETING

AND MARKET DEVELOPMENT

1.1 FUNDAMENTALS OF STRATEGIC MANAGEMENT

1.1.1 Definition of strategic management

1.1.1.1 Definition of Strategy

The word “strategy” has been defined in many different ways According to

Johnson and Schole, strategy “is the direction and scope of an organization over the long-term, which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations”

1.1.1.2 Definition of strategic management

Strategic management is a field that deals with management decisions and

activities to determine the long-term performance of a company Its activities comprise

of establishing goals and objectives, environmental scanning (both internal and

external), strategy formulation, strategy implementation, evaluation and control

1.1.2 Strategic planning and implementation process

1.1.2.1 Strategic planning process

The firms’ strategic objectives should be revised to make sure the executives to

capture exactly contents of the strategy, why it should be followed and to figure out the corresponding targets

Developing structures to shape strategy: Organization structure; Develop

operational plan and Capital structure

1.1.2.2 Strategy implementation

Implementation of the strategy will be officially announced throughout the firm Programs and policies to support the implementation of the strategy will be also carried

out.

Directing administrators and employees of the company: The managers have to inake decisions to provide solutions and tools for each department of the company to perform the task

Activities coordination: The firm’s performance will not be high if it’s not interested in coordinating activities between different departments To perform a task, a department would need support of other departments Also, the firm has to take into account the relationship between the staffs to ensure that work arrangement is reasonable

1.1.2.3 Strategy control, evaluation and adjustment

Monitoring the implementation of strategy: Firm should ‘ave a division or a team doing the monitoring supervising all activities to ensure operation in accordance with the process and reduce waste

Evaluation: is a process mainly used to assess whether the goals and objectives are

being achieved or not It is the comparison of actual project impacts against the agreed

strategic plans

Adjustment: Through monitoring and information systems of the firm, managers

are aware of arising difficulties and opportunity etc Based on this, they can make necessary adjustment to ensure that the projects are implemented most effectively

1.1.2.4 Summation

Summation to review the entire process of execution and management of the

strategy The managers can gain experience, find out their restrains and opportunities

for the development and implementation of the strategy in the next period

1.1.3 Strategic planning tools and techniques

1.1.3.1 External factors analysis

Analysis of external factors include analyzing macro-economic factors (inflation, interest rates, exch:nve rates ete.), political & legal (legislation, government policy),

environmental (soil climate etc.), the level of technologies, socia! factors of the target

market (age distribution growth rate, career attitude etc.) , suppliers and competitors

Based on the analysis, the firm can assess opportunities and risks to develop an appropriate strategy for long-term and short term goals

1.1.3.2 Internal factors analysis

Internal factors analysis is used to find out the strengths and weaknesses of the firm through the assessment of the main elements such as marketing, finance, and the relationship between these factors Base on that analysis, the firm can set goals in conjunction with the opportunities and threats from the outside to take advantage of the strengths and overcome weaknesses

1.1.3.3 Summary of impact factors

Analyzing firm's interests of impact factor using the matrix as follows:

Table 1.1: Summary of impact factors

Impact factors | Significance of Significance of | Attribute Points

the factor the factor related to the related to the

(1) List the factors that affect the whole industry in general and the firm in

particular; (2) Significance level; (3) Classification; (4) Attribute; (5) Point

a) Matrix of external factors:

This matrix is used to classify the significance level of external factors to the

industry and the firm It allows the firm to summarize and evaluate each factor to have

an Overview of each opportunity and threat to the industry

b) Matrix of internal factors:

This matrix will determine how important each internal factor related to the whole

firm (classified according to the industry) and assess whether the firm’s internal control

system is compliance with the requirements of industry in the current situation? Based

on this, the firm can know what its strengths and weaknesses are, so that it can develop

a strategy to promote or to limit accordingly

1.1.3.4 SWOT analysis

SWOT analysis is a set of opportunities and threats, strengths and weaknesses affecting the current status and future of the firm in an interactive relationship The strategy will be determined based on the position analysis of each relationship

Table 1 2: SWOT matrix

SO Strategy: The firm uses its strengthes to take advantage of opportunities The combination of strengths and opportunities allows firm to expand and diversify

WO Strategy: The firm has more weaknesses than strengths However, the firm

can overcome weaknesses by taking advantage of opportunities

ST strategies: this is the situation where the firm uses its strengths to both reduce and overcome external threats

WT Strategy: The firm cannot deal with external and internal threats, thus no more be able grow In this situation there are only 2 option for the firm One is to declare bankrupt or to merge with another firm

1.1.3.5 Determining strategic objectives

a) The firm's missions & objectives:

The firm’s mission and objectives act as a focal point for people to understand the purpose and direction of the company The firm’s mission will be broken down into smaller goals The firm’s strategies and specified activities are created to achieve those

goals

b) The firm’s goals

The firm’s goals are more concrete and can be changed in certain period There are 2 types of goals: Short-term goals (from | to 3 years but depends on industry) and Long-term goals (5 years or more but depends on industry)

1.1.3.6 Selection of strategies

a) Corporate strategies:

Corporate strategies includes: Market development: Market penetration; Product cevelopment; Vertical integration; Horizontal integration; Concentric diversification, Disinvestment; Liquidation; Horizontal diversification: Conglomerate diversification; Joint venture

1 Market development

1 Market development 2 Market penetration

2 Market penetration 3 Product development

3 Horizontal integration 4 Forward vertical integration

4 Deinvestition 5 Backward vertical

5 Liquidation integration

- 6 Honzontal integration

weak compehive 7 Concentnc diversification Strong competitive

PODS01 position

1 Reduce expenditure 1 Concentric diversification

2 Concentric diversification 2 Honzontal diversification

3 Honzontal diversification 3 Conglomerate

4 Conglomerate diversification

diversification 4 Joint venture

5 Deinvestition

6 Liquidation

b) Strategies at product level

From the above objectives, the firm can select an appropriate strategy based on

Ansoff matrix Existing product New product

Existing market | Market penetration Product development Narket New market Market development Diversification

1.1.3.7 Determination of product life cycle

When the product is identified at a certain stage of the life cycle, the firm can create an appropriate strategy to combine with the current marketing mix A product’s life cycle has 4 phases: Market introduction Stage; Growth stage; Mature stage; Saturation and decline state

c) Distribution: Distribution strategy is based on six basic factors: directly or

indirectly sales channel, single or multichannel, channel length, type of delivery, number of distributors at each level; how to select distributors

d) Promotion: Based on 5 main types: Advertising; Direct sales; Sales promotion;

Direct Marketing and Public Relations

1.2, COMPANY AND MARKETING STRATEGY

1.2.1 Fundamental of marketing strategy

Marketing activities of the firm responding to the question: who are the

customers? Where do they live and buy ? Why do they buy ? What kind of products do they need ? What are the characteristics? How should the pricing strategy be? Which should the firm apply discount rate? How should the firm create distribution channel system ? How should the firm organize promotion campaign ? Which kinds of services

should the firm offer?

1.2.1.1.Products

Products is anything that can be put into the market to gain attention, to sale, to use or consumption It should be able to satisfy a desire or > need A product can be erticles, services, ideas or locations

1.2.1.2.Market

Market comprises all current and potential customers, that has a specific need or cesire They are ready and be able to participate in exchange to satisfy their need or cesire

Modern economies have a lot of markets such raw materials market, labor

market, capital market ete as well as the goods market, Manufacturers purchase

resources from those markets and turn them into goods and services Each national economy and the world economy combine into complex set of markets, that connect to each other through the exchange process

1.2.2 Marketing strategy is a part of the firm’s strategy

1.2.2.1 Marketing mix

- Market research: is is an objective process to gather information about markets 0; customers, to solve the basic problems of business Market research helps companies to determine: business field , the selection of products as well as business

policies to maintain, improve or develop new products, current and future demand,

- Product strategy: is an effective business methods, to satisfy needs and desire of customers in each period Product strategy is considered the backbone of the marketing

strategy

-Pricing strategies: is used for setting a price for a products, corresponding with the market demand to maximize the profit in each period In a market, where the

demand for products is highly elastic, the role of prices becomes more important

- Distribution strategy: involves in the process of making a product or service

available for use or consumption by a consumer Distribution strategy has close ties

wth the product strategy and price strategy On the one hand, it is influenced by the

product strategy and price strategy , but on the other hand it also has a big impact on the development and implementation of those strategies

- Promotion strategy: is a technique used to Support sales activities and promote consumption It is a useful tool to support product, pricing and distribution strategy Promotion strategy includes advertising Strategy, sales pron.vtions strategy and sales

support strategy

1.2.2.2 Factors affecting sales of the firm

-Internal factors include commodity prices, quality of producis, product portfolio, advertising methods, distribution network and after-sales

service

-External factors include economic factors (income per capita, inflation etc.), the

number of competitors, consumers’ taste

1.2.2.3 The role of marketing Strategy for firm’s growth

- The nature of the market: The market conforms to principles of market economy, but also under the management of the government and ministries etc to overcome the adverse effects of self-regulatory market mechanisms It’s called socialist-oriented market economy Markets always change due to many different factors

- The function of the market: Some key features of the market: recognition

function, implementation function, regulatory functions, and information function

- The role of the market: market is a "bridge" of production and consumption

This is the place where the exchange between goods/services and money occurs

Thereby, the companies can identify the demand and evaluate their own performance

- Factors affecting the development of market Strategies include: macro environment, industry environment, and financial & economic situation of the firm

1.3 GARMENT AND FASHION IN VIETNAM

1.3.1 The demand

The clothing and fashion shopping are performed in many distribution channels such as: traditional markets, specialized shops, fashion shops, supermarkets, shopping

malls etc As the rising of brand names and fashion awareness as well as high

quality products demand, there is a prediction that annual garment commodity turnover

will raise up to 15% in 2012 (following “Vietnamese retail market analytic report 2008- 2012” published by RNCOS) The need of higher quality garment products shares

the same growth rate with brand name awareness

There are a very big number of garment customers in Vietnam with diversified demands Consumers are willing to spend 150,000-500,000/month, 18% of total monthly expense, to shop Among them, consumers in the age of 20-25 shop the

most with 46,4%; consumers in the age of 26-35 is next with 23,8% 70% consumers shop every month and the number of consumers who shop once per 2 or 3 months

There are many companies of this type but most of them are small sized with not

so high quality, low price and almost unknown brand Therefore, the pressure

from

domestic market is not so big

1.3.3 The competitive/ whole distribution channel competition/Marketing

1.3.3.1 Hidden/Potential competitor

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According to M.Porter, hidden competitors are companies which have the ability

a) Hidden competitors

textile

Besides, there are ready-made products from other countries which have

not

imported into Vietnam yet but will Especially, when Vietnam has become a member

new

opportunities, Vietnam garment industry has to face with many new challenges

import

tax on garment products at 50% is about to reduce down to a low level of 10-15% which is the common rate of all WTO’s members

b) Factors determine pressure from hidden competitors

According to the above analyses, Vietnam garment industry has to compete with many hidden competitors, but their pressures which are either big or small

The second factor determining the pros and cons level to join in garment industry

of hidden competitors is entry barrier

li

eJechnical barrier: Vietnam garment industry has the feature of using simple technology with its industrial sewing machines imported from internal or external market Therefore, we can easily see that Vietnam’s technical barrier is not so big

e Capital barrier: Garment companies used their initial capital to invest in building factories, hiring labors as well as buying sewing machines and materials Labors are hired for Vietnam garment industry at low cost, the owners also don’t spend too much

on machines and materials So the initial investment capital is not required much So again, the financial barrier is not a big deal

e Commercial barrier: It’s involved in the entrepreneurs’ brand name, distribution

network as well as their images If joining in this industry, hidden competitors have to face with many difficulties in competing with currently well known brand names like Viet Tien, May 10, PT 2000 which are holding a wide distribution network and a great

number of loyal customers So this is a great barrier for those hidden competitors

eResource barrier: To the garment industry, the input resources consist of designers, tailors, sewing machines and materials like cloths, threads, buttons and buckles But most of garment companies don’t own the exclusive material source

yet

have to import from other countries Nowadays, the fashion demand is very rich and each designed model will satisfy each type of customers Therefore, Vietnam garment industry has no difficulty in resource barrier

eCurrent companies’ protest: This is going to be a very tough and hard-to- overcome barrier for hidden competitors if they want to join in Vietnam garment

industry Vietnam companies today have the ability to aggressively compete, along

with their advantages inherited from the ascendants, so suicly they will take a very strong reaction toward those competitors joining in this industry

In short, from the above analyses, we can see that the pressures that hidden competitors have put on Vietnam garment industry is not much

1.3.3.2 Domestic competition:

The competition between garment companies is usually affected by 3-in-1 factor:

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industry structure, industry demand and exit barrier

a) Industry structure:

This is the distribution in size and quantity of companies in this industry Representatives of particular big sized ones can be listed as Viet Tien Garment Joint Stock Corporation, Nha Be Corporation, Viet Thy, Viet Fashion company (Ninomaxx), Nguyen Tam fashion company (Foci), An Phuoc, Viet Thang, May 10 Although there have been a great number of companies, none of them can take main role and affect the business of others Therefore; garment siructure can be considered to be scattered aggressive in terms of competition level in the market, mainly on prices The prices of

Companies producing intermediate or high-grade goods are also at those levels to mark

their quantity, model, style and brand name Those at intermediate level like

Ninomaxx, PT2000, Blue Exchange or Viet Thy take up 60% market share, the rest 40% is divided within low-price products and intermediate or high-grade products of young designers Although 60% market share has been taken up by intermediate and high-grade fashion segmentation, this is always the center of u:l competitions

To groups of companies producing low-cost products, the competition between

them is less aggressive These are retail companies, small factories or handicraft

workshop Their products are sold by retail in markets, pavements or street-vendors Their qualities as well as models are at low level with no brand name These companies apply low-cost strategy, produce for ordering and sale in lot

b) Industry demand

Wearing has always been an essential need of human beings In the situation of joining in the World economic today when citizen’s income has gradually grown up, so the demand for clothing shopping is also growing big The demand is big whereas the competition is still aggressive since the demand is big but be divided into segmentations On each of these, there are many companies taking up so that

aggression can be understandable

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c) Exit barrier:

These are ties that make companies hard to exit from this industry The first, Garment companies need many labors and this helps a lot in solving the job problem If exit happens, these labors surely lose their jobs And as a result, this affects not only themselves but also their families

The second is technical barrier consisting of stable properties, machines,

technologies Besides; it also put a bad effect on the connection to other braches such

as textile and material supplying industries

From these above, we can recognize that to the garment industry, the exit barrier

is so high Therefore, the competition will be so much more aggressive

1.4 THE NECESSITY OF VIET FASHION JSC TO FORM PRODUCT

AND MARKET STRATEGY

Currently, in all provinces and abroad increasingly appear several fashion companies with many novel design diversity is affecting more cr less to market the Company Fashion Vietnam The company is facing more competition as major brands

like: PT 2000, AC 2000, Tony, Foci, Sea, Blue Exchange.Qua showed that the market

share of 18% SP Nino Maxx Therefore, the company wanted to survive and to

stand firm on the market, they must create a certain strength

The policies set out the right products to help companies use capital efficiently, save costs, increase profits Product diversification and innovation is one of the factors leading to success of the company Companies must create the right product at the request of the market, attractive products to attract buyers and meet the expectations of many consumers

Also, distribution system of the company now mainly in the domestic market but not the first government to the provinces in the country (only a 18/53 situation of the company store) Therefore, improving the distribution networ™ and a richer diversity, to

be able to provide the company's products to customers in a convenient, cost savings,

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in time meet every need reasonable requirements of customers from which to create the trust of customers

To become a leading business professional wholesale and retail fashion products, ensuring the economic growth, increased annual profits of the company towards production on a lot of good quality products , a rich variety of designs and prices not too high to compete, Then the strategic planning and product markets are essential for Fashion Company in Vietnamese

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Chapter 2

CURRENT MARKET CONDITION OF VIET FASHION

JOINT STOCK COMPANY IN THE PERIOD OF 2005-2010

2.1 OVERVIEW OF VIET FASHION TRADING JOINT STOCK COMPANY

2.1.1 History of foundation and development of the Company

- Company name: Viet Fashion Trading Joint Stock Company

- Add : 84A Ba Huyen Thanh Quan, Ward 9, Dist.3, HCMC

- Tel : (08) 35262188 - Fax: (08) 35262189; E-Mail: vietfashion@ninomaxx.com.vn

- Certificate of business registration: 4103007912, Date of issue :25/09/2007,

Place of issue: HoChiMinh City

- Registered capital for business: 151.875.000.000.000 d

- Business: the key fields of the company include garments, clothing, hats, belts, handbags

2.1.1.2 The development phases

Stemming from the idea of "Vietnamese people shall use Vietnamese products" and capture the tastes and needs of consumers, in 1998, Maxx Maxx brand was born with various designs, rich in materials, designs and colors Maxx Maxx has completely

conquered consumers especially young adolescents, who love novelty

Besides the initial success in 1999, the company has decided to launch a new product branded Nino to meet the expectations of consumers, giving customers more

choices of products that have been certified for quality and colors

In 2002, NiNo marked a new development in the field of fashion from Ninomaxx

Nino brand and with the establishment of the Viet Fashion JSC with two brands such as Maxx and Ninomaxx

With a staff of professional, experienced designers, along with rich, new ideas that

the company have continuously launched many products with very diverse and rich

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styles Including: Clothings, hats, belts, bags for men and women when playing sports, walking or going to the offices

2.1.2 Functions and duties of the Company

2.1.2.1 Functions

- Direct production and export processing of garment products for men and women Mainly between the ages of 15-35 for the domestic market and overseas market

- {mports of raw materials, modern equipments for the design and production

2.1.2.2 Duties

- Implement annual plans that the company has set for each department

- To study the production of goods towards the use of domestic raw materials, along with increasing production, rationally arrange the production lines, a positive

innovation and technical equipments to ensure high quality of products

- To provide consumers with new, various, rich products on colors and designs and

product quality

- Good management and use of labor, materials, assets and capital of the company

Full implementation of all targets, policies and guidelines issued by the State in the field

of business

- Care for life of employees Full implementation of the salaries, insurances, social

welfares for all employees of the company

2.1.3 Organizational structure and functions of departments of the company

Currently, the numbers of employees working in Viet Fashion JSC have 850 employees In which, the numbers of skillful employees with their diploma accounted

for 5%, 15% of colleges, 35% of high school, the rests are unskilled workers

2.1.3.1 Management system of the company

- Chairman of the Board and CEO: As a highest leader in the company, who shall

be responsible for overall management and administration, is empowered to decide the

17

strategic business, financial accounting, organizational structure and staffing activities for the whole company

- Legal advices for the company: A person who shall “e responsible for guiding the company to resolve issues related to law

_ Financial Director: A person who shall be responsible for monitoring the activities of the accountants, auditors, treasurers and revenue and expenditure activities

of the Company

- Director of Business and Production Development: on behalf of managing

director in charge of the production and distribution of goods to retail outlets, management and implementation on schedule, setting up business plans and assessing

the performance of the company each month, quarter or year

- Director of sales and trading: shall be responsible for finding new clients, understanding tastes of consumers, capturing information about prices, consuming

market, implementation of advertising programs, opening outlets

2.1.3.2 Departmental units of the Company

- Departments:

+ Production department: Shall be responsible for the production plans, quality control of products, checking on imported raw materials, monitoring production processes to complete products on schedule, checking quality products before launching

the consuming market

+ Personnel department: Shall be responsible for managing all activities of security guards, odd jobs, administrative staff

+ Design department: Shall be responsible for product designs and researching needs of the consumers’ tastes

+ IT department: Shall be responsible for managing the operation of machinery,

equipments and maintenance of production equipments of the company

- Stores: Stores shall perform to sell the items, quantities and types of customers

demands

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Graph 2.1 Organizational structure of the Company

Directo Busi || Bust

consu Busin AN ness || MESS |] ụ đan

: ess ens : in ine

£

mpuon : m say

rl & super | | €£m non || east || °° oes

busines visio |} &™" | [he [| & in

Lega! fo ————] ———

Itants | ming | nce &

Distr Ware Inv

F † tbuto hous ent

col || de Human | [start] [bidy || Odd} | we

ctor | |_| resource -— guar F Ojo H employee b $s

Produc| | Produ Proc inspe | | Director tion cion | |$ |_[ction 1 of

a plans | [8 workshop

| Business &

production

r | development

Cfo - se tre | lace

| | Chief |] | chư LÍ] |j Aec | | Bal | RS

Finan Acca || 4 ount | | anc [| L nu

cial untan || 4 | ant eof || 4" | Jants

2.1.4 Field of business

- Production and distribution of textile items including clothings for men and women, hats, bags, belts, shoes, sunglasses and fashion jewelry accessories

- Design and fashion consultant

- Distribution of the retail system built by the company and the franchise and wholesale of fashion items produced by the company

2.1.5 Characteristics of technological processes

Graph 2.2 Production process of the company

Sewing plant > Accessories

| Finished products Packing

Production process of the company shall be done through three main stages

- Cutting: After the design department sends designs to the factories, then they

shall conduct to cut forms as prescribed

- Sewing: the sewing workshop shall receive semi-finished products from cutting department then send to the separate lines for each applianc* parts, then assemble the

parts together into a finished product, then transfer to the KCS department to check

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- Completion: After KCS completed to check, the standard products will be

transferred to the inventory, then the business department will distribute to the dealers,

the supermarkets etc

2.1.6 Features of products

The company now owns three major brands with product features as follows:

NINOQMAXX Style Revolution — For young persons

Was born in 1998 Common dynamic fashion for men & women, ages from l7 to

30, average income is quite Series: Complete, including shirts and pants / skirts

It is simple as class

Was born in October - 2009 Re-launch in November — 2010 Common fashion for

courtesy for all customers with their average income Series: Complete, including shirts and pants / skirts

PN

Fashion "work & play" (working & walking) for elegance Brand

brings elegant - young - sexy styles for customers with professional services

Was born in December- 2008 Focus on objects as office workers, aged from 22 to

35, good incomes above Series: Complete, including shirts ard pants / skirts

1.7 Market share of company

Graph 2.3: Percent of the market for the brands currently

DỊ PT

2000

Other brands

39%

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Through the statistics of market of Ho Chi Min

of Nino accounted for 18%, higher than Blue products (15%

products such as: PT 2000 (28%), other brands accounted for 39%

Using data of customers who have used Ninomaxx pr

we found, that customers have also seen some other fashion b

h city, we saw that the market share

), but lower than the other

oducts of Viet Fashion JSC, rands such as PT 2000,

Blue Exchange, Tony , Foci, Sea In which the PT 2000 and Blue Exchange accounted

for relatively higher proportion (PT 2000: 31%, BE: 30%)

2.2 BUSINESS SITUATION IN PERIOD OF 2095 - 2910

2.2.1 Production and business situation of the company

To analyze the business situation, we consider the table for business results report

of the company for five years

Table 2.1: Business results from 2006 to 2010

Unit: million dong

1 Sales of goods and services 107,859 | 192,860 | 228,026 | 360,833 420,390

2 Net revenue from sales and services

supply 107,859 | 192,860 | 228,026 | 360,833 | 420.390

5 Financial expenses 18.250| 22750| 29122| 35700| 32/56

| 7 Expenses for Enterprise Management 14,700 19,725 | 26,700 | 43,500 47,350

11 Corporate income tax payable 2,433 13,102 1,728 13,294 17,050

Recently, the Company always try to investment in modern technologies and

research, so that the company can produce the variety of fashionable products, in line

with the needs and the tastes of consumers The company is consuming their products increasingly, so the company's revenues has increased over the years, revenues of later year are higher than in those of previous years, particularly increased since 2008, the company has completed in excess of the annual plans launched

2.2.2 Main results of business situation in period of 2005 — 2010

2.2.2.1 Models

For today's fashion market, the diversity and innovation of products is one of the

factors leading to success of a company Every year in every season, the company

launches a new collection, these products must conform with the seasonal climate

conditions Products diversification and quality are always a top goal of the company

‹ Currently, the products are traded by the Company, including:

+ Textiles for Men, Women Jackets for Men, Woaen Overcoats for Men, Women Shirts for Men, Women T-Shirts for Men, Women Clothing for kids

+ Sport Pants for Men, Women Jeans for Men, Women Shorts for Men, Women Short Pants for Men, Women Pants for Men, Women, Paints for Kids

+ Belts for Men, Women, Hats and Bags

Materials are being used by the company: Cotton, Jean, Kaki and Lynan

+ Reviews of customers on models of Ninomaxx product

Although the company has continuously improved their products but most

customers saw that product designs are only temporarily (42.7%) Today, the company

is investing in the design department to diversify product designs to meet and satisfy

customers needs for fashion, especially during the upcoming summer

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Graph 2.4: assessment of products models

s Reviews of customers about the quality of Ninomaxx prodcuts

Graph 2.5: assessment of pro ducts quality

products via models that they are interested in quality, durability of the products

Today, the company is using many different materials like Cotton, Jean, Kaki, Lynan

to improve product quality

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2.2.2.3 Colors

* Oriviews of customers about the colors of Ninomaxx products:

colors of the products are richer

Graph 2.6: assessment of products colors

¢ Products of Ninomaxx always adhere to images:

Chart 2.7: Expression of products images

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Most of the youths in this study suggested that Ninomaxx products give them

youth (58%), some of them said that those products are fashionable (rate of 34%)

Some people felt that Ninomaxx products create a dynamic style (33.3%) This

suggests that Ninomaxx brand partially meet the needs of target customers

Table 2.2: Statistics on production status of NinoMaxx products over years

~ Products Year of 2006 | Year of 2007 | Year of 2008 | Year of 2009 | Year of 2010

2.3.1 Consuming markets of the company:

Table 2.3: Number of shops are being sold in regions

Unit: Shops

| Form Retai | Wholesal | Retai | Wholesal | Retai | Wholesal Retai | Wholesal | Retail Whole

Table 2.4: Quantities are sold in regions over years (Unit: Products)

Products Reven Bevenu Reven Revenu “TR

Shirts 77,444 | 19,218 | 115,396 | 34,363 116,946 | 40,629 lồ bế 64,292 167,691 | 74,903 T-Shirts 222,599 | 37,870 | 331,686 | 67,715 336,142 | 80,062 me 126,692 | 481,999 bu Overcoat 16,480 | 6,917 24,556 12,368 24,886 | 14,623 | 34,458 23,140 35,684 | 26,959 Jeans 39,775 | 16,077 | 59,267 28,747 60,063 | 33,988 | 83,165 53,784 86,126 | 62,661

— 39,208 | 16,461 58,423 29,434 59,208 | 34,801 | 81,980 55,069 84,899 | 64,159 Breechers | 15,739 | 4,148 23,453 7,417 23,768 8,770 | 32,909 | 13,878 34,081 16,168 Shorts 18,169 | 6,776 27,073 12,116 27,437 | 14,325 | 37,989 22,668 39,342 | 26,410 Jacket 751 277 1,119 496 1,134 587 1,570 928 1,626 1,081 Belt 1,271 114 1,894 204 1,919 242 2,057 382 2,752 445 Total 431,436 Ha 642,867 | 192,860 | 651,503 228,02 707,08 360,833 | 934,200 ne

Through statistics, we saw that the main products of the company currently have the strongest rate of consumption over years: T-Shirts for Men & Women jackets for Men & Women Shirts for Men & Women, Jeans pains, Sport paints This shows that the currently targeted customers love sporty, youthful styles Currently the company is planning to diversify the products designs to retain old customers and attract new

customers

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2.3.1.1 The domestic market:

Phong, Hue, Da Nang, Nha Trang, HCMC, Vung Tau, Binh Duong, Ca Mau

2.3.1.2 Foreign Markets:

the number of stores from three in 2007 to five in 2008

2.3.2 Target market of the company

Primarily consumption market of the company now is domestic market, while overseas markets are not strong

2.3.2.1 For the domestic market

Through statistical data in tables 1 and 2 (with 21 large and small shops opened in

2008, with 173,253 products were sold in 2005), in the last years target market that the

Besides markets that the company is also very concerned, is the market of Central and Western provinces Although not many goods were sold in 2008 (38,350 products) the rate of consumption growth significantly over the years In this market, the company plans to consume in level 2 (inventory) because at present, the current inventory of company is relatively high (with 815,000 products)

Target market of the company in the coming years beside Ho Chi Minh City are:

- Central Market and the Central Highlands Dak Lak, Dalat, Phu Yen

(Giang

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=> In the future, the company plans to open 35 additional agents in these target markets

2.3.2.2 For foreign markets:

Currently, the market that the company is most interested is Cambodia Besides it, the company also identified the potential market for following years: Singapore (01 branch), Malaysia (01 branch), Taiwan (01 branch), Philippines (02 branches), South Affrica (01 branch), Indonesia (01 branch), Dubai (01 branch), Thailand (03 branches) 2.3.3 Assessing the situation of the market development of the company - stage 2005 - 2010

developing markets and diversifies products

Firstly, the company's products have been known to customers both at domestic and abroad Domestic market is no longer restricted in Ho Chi Minh City but also extended to other central provinces, the Northern

Secondly, existing distribution channels of the company have been taking full advantage, including agents, showrooms across the country have been promoted

capacity in recent years The company have focused on network and distribution channels development, to promote consuming products

Thirdly, in the context of fierce competition among firms in the industry and compete with imported goods, sales of the company has steadily increased in stage

2 Trusted Brand (by Vietnam Enterprise Network, 2006-2008)

3 Best Fashion Brand (by Vietnam Garment-Textile Association, and SaigonTime, 2005->2009)

4 Ninomaxx - Top of customer mind (79% customer awareness, by FTA research

in 2008)

5 Ninomaxx - leading market share (47%) in the branded casual wear segment (by FTA research in Dec-2008)

CÔNG TY TNHA TM - DV - TV THIET KẾ THÔI /RANG VIỆT payne

ay - tho

“TU ung tem Mang VÂỆt Hạnh (hết lưng cán TGNG

o te Gang ken chan (ose tưệc Giles ton ập báo lài Gan Tráp Thu tố ches

- dối pưcfk.e Kho —.— GAO, “ESTEE BR pam

2.3.3.2 Limitations and causes

a) Limitations:

Besides the achievements that the company achieved, the company faced many

difficulties, especially in the accounting for field and market expansion

- The company's products market is also unbalanced The domestic market is concentrated in the center of Central, Southern and Northern Vietnam, not evenly across the country Foreign markets are limited and not expanded

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- The marketing task has not been focused, marketing, surveying the demand and the forecast for the market is not timely so the market development in recent years was slow; company names is not known through mass media Some products are not advertised properly The investment for developing new product lines is limited

- Distribution of products is not complete and not reaches out enough to cover the entire target market

b) Causes

These existences in the development of the company’s market in the period 2005-

2010 are mainly due to the following reasons:

- The Northern and Central Vietnam Market, which are not flourished due to difficulty to space, high transportation costs On the other hand, it must compete with

other companies in this market

- World markets fluctuates constantly, especially in raw materials prices It also

increases waste input costs and production costs

- Investment in scientific research, technology is not adequate, so the product tastes of consumers reduced purchases

- The brand promotion and marketing are not well implemented thus didn’t

Create a deep image in the customer's mind

2.4 ASSESSMENT OF FACTORS AFFECTING TO COMPETTITION AND MANUFACTURING ABILITY OF THE COMPANY PERIOD 2005 - 2010 2.4.1 Technology standard

The company focuses on innovation and continuously update the latest technology to the most advanced applications on products for each specific collection

eg anti-wrinkle treatment technologies in Khaki pants, chemises; 4-way stretch fabric drying

Tradition and innovation, from cutting and sewing of structured and unstructured for Men womenswear for computer-aided design, AutoCAD, Excel, Illustrator,

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design of products ranging from garments and accessories will be analized to optimize the quality, Fit, manufacturing, and innovation

2.4.2 Source of used capital in the company

Table 2.6: Situation funded period 2006 — 2010

2006 |2007 |2008 [2009 2010

' Protit (million VND) 6,255 | 33,691 | 35,183 | 39,883 51,151

| Venture capital (million VND) 110,000 | 200,000 | 257,000 | 291,000 | 331,000

| Own capita! (million VND) 20,000 | 120,000 | 151,090 | 151,000 | 151,000

| Profit rate on venture capital 5.69% | 16.85% | 13.69% | 13.71%] 15.45%

| Profit rate on own capital 7%| 28%| 23%| 26%| 34%

Through the use of funds table at JSC Vietnam Fashion shows coefficient of

return on business capital, and equity capital in recent years this could increase the use

of 2 company's capital efficiency, capital has increased, the business capital increase

shows market trends, increase revenue by selling products On the other hand the size

of the equity capital increase which suggests the company has invested in fixed assets, equipment for production

it aid also create conditions for individuals complete development and improve their capabilities

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- During the probation period, the company building assessment candidates should be able to evaluate the real capacity of the candidates through the job the employee has shown

-The company specializes in manufacturing and trading of garment products, most sales staff and workers are educated and 12/12 After each of the Tet holiday usually leave a lot to influence the progress of production and the ability to supply goods to the stores, take time to recruit personne! to compensate for the vacancies

- When recruiting positions in companies, cften in collaboration with a number of companies specialize in providing personnel (head hunter) This problem is made more costly and time costs of the company

2.4.4 SWOT assessment of the company period 2005 - 2010

* Strengths:

With abundant human resources, youthful and dynamic staff, qualified high technology has made beautiful products and high competition and help Vietn Fashion

JSC achieved many successes in Vietnam's market

Managers have qualifications, long experience has hold the market changes, by Organizing market surveys, surveying customers’ opinions, and managers have hold

tastes and needs of consumers since then making products that can satisfy the

expectations of customers

The company has designed a product distribution network across the country,

with strong workforce in the retail distributions are dynamic, enthusiasm, youth and ready to serve customers considerately and listen to the opinions of our customers

The company has attracted a team of technicians, skilled workers, highly

qualified to work in the company more and more

The company has also invested heavily in capital equipment with modern

technology to replace old and obsolete equipments to impove product quality and increase labor productivity for the company

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* Weaknesses:

Because the distribution system of the company is too large, the management of branches in provinces of the company are still loose, not tight, and not synchronous This has caused some negative issues such as the loss product in the dealers, embezzlement of coupon for customers; in provinces, the price is not consistent with the expenditure branch It affects the results of operations of the company in recent

years

In spite of many of the company's products are certified for quality and design, but preduct prices remain relatively high, caused customer catisfaction has not been that much Because the company's customers are mostly young teenagers, whose labor income are not high, consumers still do not satisfy with current price levels

Particularly in the small provinces, income of people which are not being high so for the consumption of the company's products is not strong compared to other major Cities

In recent years, the implementation of the advertising program of the company is not been strong The company did not pay attention to ads, ads is not widely applied in

provinces and cities Because the cost of advertising is very expensive so the company

just only made advertising in big cities like Ho Chi Minh City, Hanoi by: Hanging the

panels, posters, advertisements in newspapers, on TV (fashion and life categories) Salespeople in the distribution is not stable, they often changes the salesperson repeatedly, with many different reasons This has made the operation in the distribution

The market increasingly appears many strong fashiou companies With many various, novel designs, it attracted the attention of consumers It makes number of customers of the company decreased

Customers are increasingly more difficult, the requirements of customers for these products are high in both in quality, color, price to the attitude serving of the staff

2.5 ANALYZING ECONOMIC SITUATION, POLITICS — SOCIETY, BUSINESS ENVIRONMENT, OPPORTUNITIES AND THREATS FOR THE COMPANY IN PERIOD 2011 - 2015

2.5.1 Economic situation, politics — society, opportunities and threats for the company

2.5.1.1 Economic situation, politics - society

Currently, our country’s political system is stable, peaceful We cooperate with all countries in the world, expanding and improving the efficiency of external economic relations Besides, the deeper integration of Vietnam into the regional economy and the world economy also facilitate to approach market more easily for

textiles Vietnam is now a member of WTO It also attended to signing and

implementing important various free trade agreements in both the bilateral level (including an agreement on trade partner of Vietnam - Japan) and the multipartite level (such as agreements within the framework of ASEAN as ACFTA, AKFTA, ASEAN-

Australia-New Zealand, etc.)

Vietnam’s commitments to reforms and develop the economy has made attraction

to investors, and opening new markets and new partnerships Moreover, the domestic market itself has a population of 84 million people with the living standards has been

increased gradually It caused the attention of investors and entrepreneurs

However, Vietnam’s textile industry is also faced with significant challenges On the one hand, the starting point of Vietnam’s garment is low, and supporting industries

have not really developed, mainly raw materials are imported, high-rate processing,

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weak competitiveness in comparison with other countries in the region and in the world are challenges of global economic integration

In the last period, the government has implemented several methods to support exporting textile business The Ministry of Industry and Trade issued Decision No 42/2008/QD-BCT on 19/11/2008 for approving the master plan to develop the textile and garment industry in Vietnam until 2015 and orientation until 2020 Following it, some general objectives are as follows: developing the textile industry become one of the essential industry, essential exports, and improving competitiveness, economic integration firmly into the economy in the regicn and in the world The specific objectives are shown in the following table

Table 2.7: Specific objectives in the textile industry development strategy

until 2015, the orientation untial 202u

3 Major products

| - Fibre, plastic fibre 1000 tons 120 210 300

4 Rate of interiority % 50 60 70

Source: Ministry of Industry and Trade

In addition, the Vietnam Textile and Garment Association has actively implemented the export promotion, finding new customers and orders in order to encourage businesses apply new technologies in production, promoting activities for building businesses’ image Concurrently, it direct to increase market share in the market segments with higher income, warned businesses to actively prevent and

combat the risk of applying anti-dumping methods from importing countries, especially the United States of America

2.5.1.2 Opportunities and threats for the company

Secondly, the income of people in the country increased more and more, create

larger demand for fashion, and larger market for textile industry to develop both scale and scope of operation

Thirdly, the trend of economic globalization and international economic integration is now creating conditions to attract capital, advanced technology from outside It is one of factors that ensure to enhance product’s quality as well as increase

competitive advantages both internal and external business

Fourthly, The Party and The Government have policies to promote and develop

economic, political cooperation and exchange with other countries in the region and in the world It has created a favorable environment for the development of the country Series of macro policies related with taxation, customs and administrative procedures etc have been promulgated by the government and have been encouraged to variety of business activities, with conditions, trading on many different markets

Fifthly, at present infrastructure, communications, transportation etc has been developed This is one of he factors that influence significantly to the collection of information about the market, accuracy of the analysis and assessment for obtained

information In addition to the transportation of large will be convenient significantly p g g y

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value-added is not high

Thirdly, the competition between textile products are now violent more and

more, specially when Vietnam entered WTO, with the removing of taxation barriers,

the competion will be more violent Competiors are not only in the country but also in

other countries as: Korea, China, USA, Western Europe etc

Fourthly, many policies are not stable, continuously have the adjustment in taxation It caused companies become puzzled, passive in problems to accommodate

materials, cost price, product, import — export conditions, ‘:ifluenced directly to the consumtion of products

Fifthlly, the competitors are more and more numerous, grow up in strength in all

matters The appearance of competitive rivals of developed countries in the world 2.5.2 Analyzing effects of the business environment to company’s market

development

Vietnam’s textile industry has made remarkable progress in recent years Textile

exports of Vietnam also achieved quite impressive growth results, equipments of the textile industry have been renovated and modernized to 90% The products have better quality and accepted by the difficult markets as U.S., EU, and Japan, the textile

enterprises have built up relationships is inextricably linked with many importers,

many large consumption corporations in the world

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