G1 00291 CHIẾN LƯỢC PHÁT TRIỂN DỊCH VỤ Y TẾ CỦA CÔNG TY CỔ PHẦN SỮA VIỆT NAM (VINAMILK) GIAI ĐOẠN 2011-2020 DEVELOPMENT STRATEGY FOR HEALTH SERVICE OF VIETNAM DAIRY PRODUCTS JOINT STOCK COMPANY (VINAMILK) IN THE PERIOD OF 2011-2020

G1 00291 CHIẾN LƯỢC PHÁT TRIỂN DỊCH VỤ Y TẾ CỦA CÔNG TY CỔ PHẦN SỮA VIỆT NAM (VINAMILK) GIAI ĐOẠN 2011-2020 DEVELOPMENT STRATEGY FOR HEALTH SERVICE OF VIETNAM DAIRY PRODUCTS JOINT STOCK COMPANY (VINAMILK) IN THE PERIOD OF 2011-2020

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Global Advarced Master of Business Administration

CAPSTONE PROJECT REPORT

DEVELOPMENT STRATEGY FOR

HEALTH SERVICE OF VIETNAM DAIRY PRODUCTS JOINT STOCK COMPANY (VINAMILK) IN THE PERIOD OF 2011-2020

Group No.6

CLASS: GAMBA01.C0110

HO CHI MINH CITY, 2011

VINH QUYEN

LE THI YEN NINH

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On the occasion of the capostone project report’s compleuon, our sixth group would like to express our deeep gratitude to Global Advanzed Master of Business Administration, Griggs UJniversity and Vietnam Dairy Products Joint Stock Company (Vinamilk) that haave created more favorable corditions fer us during the study The group also woould like to send our most since-e and deepest

thank-you to all teachers who havve enthusiastically imparted highly valuable

knowledge and instructed us to compplete the report

Besides, we would like to senad our thank you to teaching assistants for your

enthusiastic support And we would | like to send a big thank you te the Board of Directors of Vietnam Dairy Productts Joint Stock Company (Vinamilk) and An

Khang Clinic for valuable data and innformation to our capstone project report

Sixth Group — GaMBA01.C0110

CHAPTER 1: LITERATURE REVIEW

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1 Reasons to choose the project

Health is an important factor in the development of the country Taking good care of people's health is always a leading policy of every country Actually, the State of Vietnam always affirms that the people are the most precious resource deciding the development of the country, and so the State has been finding ways

to invest in health care for the people in parallel with investment in the economic and social development to improve quality of life of the whole people The State has been mobilizing all resources to socialize the health care cause for the people The State has encouraged all citizens to participate in health care activities in which there are two functions of health check-up and treatment

In the past years, Vietnam's health sector has always been in a state of supply failing to keep up with demand, the medical facilities have overloaded, and infrastructure and equipment have degraded while people who need medical care and treatment in urban and rural areas are increasing Moreover, the trend of demand for online medical consultation (tele-consultation) and telemedicine services are very popular in the world andextremely beneficial for people living

in isolated communities and remote regions Medical facilities of these forms are

on the fingers of one hand Vinamilk has found that this would be an attractive piece of land to expand the type of service

Besides, the investment in health services is very good for promoting the image

of Vinamilk milk with the goal of nutritious quality and human health In addition, the government is orienting to attract investment in high quality

medical facilities in order to meet current needs

Following the trend of diversification of business activities to become a powerful corporation in many different fields, Vinamilk with financial strength wants to

For the above practical reasons, our group has chosen the research project

“Development Strategy for Health Service of Vietnam Dairy Products Joint Stock Company (Vinamilk)” to express a desire that Vinamilk will contribute their effort to the development of Vietnamese health sector in general and health care for Vietnamese people as well as open up a new and promising business field for Vinamilk

2 Objectives of the study

The research objectives of the project are:

competitive competence by means of researching the process of development and competitiveness of Vinamilk’s customer care services

examination and treatment as well as existing medical establishments and finding opportunities and challenges for development strategy of Vinamilk’s health service

resources and existing medical facilities as well as strengths and weaknesses

of Vinamilk’s medical facility

Building different solutions to implement the proposed business strategy effectively

3 Scope of the study

The scope of the research of the project has only been carried out in the area of

Ho Chi Minh City where health check-up and treatment needs are the highest nationwide

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4 Methodology of the study

information and data collected details as follows:

other companies, Vinaimilk’s direct competitors Besides, they have been collected from the mass media, General Statistics Office, Ministry of Health

been made by the expert method to determine the most appropriate strategy

disadvantages of limitation of the accuracy level due to originating from subjective assessment

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Until the 20th century, the research and development of strategies in business really began From the scholars such as Drucker, Chandler, Ansoff, Andrew that have studied the largely successful development of large corporations in the United States before and during the World War II to the administrators, economists today as Michael E Porter, Fred R David, Rudolf Grunig, Richard Kuhn that have been many different approaches to strategic management in

business

Here are some different definitions of the strategy:

‘Strategy is the determination of the basic long term goals and objectives, and the adoption of courses of action and the allocation of resources necessary for carrying out goals "’ - Alfred DuPont Chandler (1962)

consistent patterns of streams of organizational decisions to deal with the environment." - Mintzberg (1979)

goals, policies, and action sequences into a cohesive whole.” - James Brian Quinn (1980)

“Strategy is choosing to perform activities differently than rivals.” - Michael

E Porter (1996)

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Grunig va Richard Kuhn (2003)

Thus, although there are many approaches and different definitions, a business strategy includes the following contents:

Y Give general action plans

Y Select the action plans, implementation and distribution of resources to accomplish that goal

Horizontal integration

Diversification, Conglomerate Diversification

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competitive advantage from three different bases:

1.1.2.3 Functional level Strategy

The functional level! strategy is the strategy of functional sections such as Marketing, Finance, Human Resources etc These strategies help improve the performance of a company and support the business-level strategies and corporate-level Strategies that implement efficiently

1.2 Strategic - Management Process

According to Fred R David, the strategic-management process consists of three stages:

1.2.1 Business Strategic Planning

1.2.1.1 Select mission and key objectives

This is the first step of the process of strategic management Mission and key goals of a firm primarily provide a context for building strategies The mission statement identifies reasons the existence of the firm and what it would do So every business has its certain mission

The key goals of a firm is to determine what the business expects to meet in the medium and long term; the destination that the firm will target; also the first and most important basis to build production and business strategies The mission of the business is very general, and the goal is to concretize the mission of the firm Defining the firm’s goals ts the basis for strategic business planning

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According to Fred R David, the process of business strategic planning consists

of three stages: input stage, matching stage and decision stage, as follows:

Stage 1: The input stage

Evaluation (EFE) (CPM) Evaluation (IFE)

Stage 2: The matching stage Strengths- Strategic Position Boston Internal- Grand Weaknesses- and Action Consulting External (I[E) Strategy Opportunities- Evaluation Group (BCG) Matrix Matrix

Threats (SWOT) (SPACE) Matrix Matrix

Matrix

Stage 3: The Decision Stage Quantitative Strategic Planning Matrix (QSPM)

1.2.1.2.1 The Input Stage

1.2.].2.1.] External assessment and External Factor Evaluation (EFE) Matrix The purpose of analysing the external environment is aimed at finding opportunities that could benefit a company and threats that should be avoided to minimize the impact of potential threats The external environment consists of

Economic factors

Political, legal and governmental factors

Social, cultural and environmental factors

Demographic and geographical factors

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or rivalry among competing firms) is the environment attached to a company and most of the company’s activities and competition are in this environment

Michael E Porter, the professor of the business strategy at Havard Uninversity has brought out the five-forces model as illustrated in the following figure

* Building External Factor Evaluation (EFE) Matrix

Building EFE Matrix allows us to summarize and evaluate the impact of the external factors to a company, the company’s business and production activities including both threats and opportunities that effect the company and its industry And to build this matnx, we need to

(very important) The weight indicates the relative importance of that factor to being successful in the company’s industry

how effectively the company’s current strategies respond to the factor,

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Wher = the response is superior, 3 = the response is above average, 2 the response ts average, | — the response is poor Ratings are based on effectiveness of the company’s strategies

score for the company, the highes possible total weighted score is 4.0 and the lowest possible total weighted score is 1.0 The average total weighted score 1s 2.5

an outstanding way to existing opportunities and threats in its industry In other words, the company’s strategies effectively take advantage of existing opportunities and minimize the potential adverse effects of

company’s strategies are not capitalizing on opportunities or avoiding

List of external factors

1.2.1.2.1.2 Internal assessment and Internal Factor Evaluation (IFE) Matrix

The factors of internal environment comprises

financial accounting

results of practical business operations consistent with the results of

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Marketing: customer analysis, selling product/services, product and service planning, pricing marketing research and development, distribution

Human Resources includes factors such as organizational structure of human resources, quality of human resources and policies to maintain and develop human resources,

Production/Operations: consists of all activites that transform inputs into goods and services Production/Operations management deals with inputs, transformations and outputs that vary across industries and markets A manufacturing operation transforms or converts inputs such

as raw materials, labor, capital, machiens and facilities into finished goods and servies Production/Operations management comprises five functions: process, capacity, inventory, workforce and quality

* Building Internal Factor Evaluation (IFE) Matrix

Building the IFE Matrix helps us to summarize and evaluate the major strengths and weaknesses in the functional areas of a business and also provides a basis for identifying and evaluating relationships among those areas And to build this matrix, we need to

List key internal factors as identified that effect the company

Assign a weight that ranges from 0.0 (not important) to 1.0 (all-important)

to each factor The weight assigned to a given factor indicates the relative importance of the factor to being successful in the company’s industry Regardless of whether a key factor is an internal strength or weakness, factors considered to have the greatest effect on company performance should be assigned the highest weights The sum of all weights must equal 1.0

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PDF Gompressor, Eres Version a rating to each key factor to indicate whether that factor

represents a major weakness (rating — |), a minor weakness (rating ~ 2), a

strengths must receive a 3 or 4 rating and weaknessess must receive a | or

2 rating Ratings are thus company-based

for cach variable

score for the company The total weighted score can range from a low of 1.0 to a high of 4.0 with the average score being 2.5 Total weighted scores well below 2.5 characterize the company that 1s weak internally, whereas scores significantlly above 2.5 indicate a strong internal position

Total

1.2.1.2.1.3 Building Competitive Profile Matrix (CPM)

Building the Competitive Profile Matrix (CPM) identifies a company’s major competitors and its particular strengths and weaknesses, thus it helps the company have an appropriate business strategy

This matrix includes both external and internal factors that effect success of the company, therefore, the ratings refer to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness and | = major weaknesss In a CPM, the ratings and total weighted scores for rival companies can be compared to the sample company This comparative analysis provides important internal strategic information

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1.2.1.2.2 The Matching Stage:

The matching stage is the stage consisting of five techniques that can be used in any sequence: the SWOT Matrix, the SPACE Matrix, the BCG Matrix, the

IE Matrix and the Grand Strategy Matrix These tools rely upon information derived from the input stage to match external opportunities and threats with internal strengths and weaknesses

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix

The SWOT Matrix is an important matching tool that allows managers to evaluate strengths and weaknesses of the company and estimate opportunities and threats of the company’s external environment, then match key external and

internal factors

STRENGTH (S) | Use a company’s internal} Use a company’s internal

strengths to take advantage of | strengths to avoid or reduce

threats

WEAKNESSES | Improve internal weaknesses | Reduce internal weaknesses

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We EW RSX helps managers develop four types of strategies:

strengths to take advantage of external opportunities

avoid or reduce the impact of external threats

weaknesses by taking advantage of external opportunities

reducing internal weaknesses to avoid external threats

I.2.1.2.3 The Decision Stage:

Other than ranking strategies to achieve a prioritized list of the best strategies, there is only one analytical technique designed to determine the relative attractiveness of feasibly alternative actions This technique is the Quantitative Strategic Planning Matrix (QSPM) which objectively indicates which alternative strategies are best

The QSPM uses input (EFE Matrix, [FE Matrix and CPM) from Stage | analyses and matching results (SWOT Matrix, SPACE Matrix, BCG Matrix, IE Matrix, and Grand Strategy Matrix) from Stage 2 analyses to decide objectively among alternative strategies

To develop a QSPM, it requires following six steps:

internal strengths/weaknesses in the left column of the QSPM This information should be taken directly from the EFE Matrix and [FE Matrix A minimum of 10 external key success factors and 10 internal key success factors should be included in the QSPM

weights are identical to those in the EFE Matrix and the IFE Matrix

strategies that the company should consider implementing Group the strategies into mutually exclusive sets if possible

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- Step 9 WSciinhe the AtVdCDteness Scores (AS) defined as numerial values

that indicate the relative attractiveness of cach strategy in a given set of alternatives Attractive Scores (AS) are determined by examining each key external and internal factor, one at a time, and asking the question “Does this factor effect the choice of strategies being made?”’

Attractiveness Scores should be assigned to cach strategy to indicate the

Attractiveness Scores is | ~ not attractive, 2 = somewhat attractive, 3 =

questions is no, indicating that the respective key factor has no effect upon the specific choice being made, then do not assign Attractiveness Scores to the strategies in that set

Step 5: Compute the Total Attractiveness Scores Multiply the weights by the Attractiveness Scores in each row The Total Attractiveness Scores indicate the relative attractiveness of each alternative strategy, considering only the impact of the adjacent external or internal critical success factor The higher the Total Attractiveness Scores, the more attractive the strategic alternative

Attractiveness Scores in each strategy column of the QSPM The Sum Total Attractiveness Scores (STAS) reveal which strategy is most attractive in each

Xesearch and Development

Management Information Systems

Note: Ratings of external factors: 4 = the response is superior, 3 = the response

is above average, 2 = the resvonse is average, | = the response is poor

Quantitative Strategic Planning Matrix (QSPM) has positive features such as integrating pertinent external and internal factors into the decision process, sets

of strategies examined sequentially or simultaneously, no limit to the number of strategies evaluated But this matrix also has some limitations: it requires intuitive judgments and educated assumptions, discussion among strategists, managers and employees during strategy analysis and choice may arise because

of genuine differences of interpretation of information and varying opinion

1.2.2 Establishing Business Strategy

Based on the objectives, external environmental factors and internal situation of a firm to establish business strategy with the following contents:

business goals

services selected: product strategy, pricing strategy, distribution strategy, promotion strategy

1.2.3 Solutions for Business Strategy Implementation

In order to implement effectively business strategies established, a firm needs to have solutions for management of production, business, human_resources,

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implement the business strategy selected namely:

resources

management

1.2.4 Evaluating Effectiveness of Business Strategy

The evaluation of a business strategy whether effective or not is very important

A business strategy is efficient when the strategy is consistent with the real situation of the business and socio-economic situation as well as it can take advantage of opportunities to achieve proposed business objectives The evaluation of the business strategy consists of the following steps:

implementation

each stage of strategy implementation in order to find defects of the strategy and have timely adjustments, modifications

1.3 Demand and actual situation of Vietnam’s health sector

1.3.1 Demand for health care in Vietnam

In recent years, health care needs of people constantly have been rising A person has the average of 2.8 times in a year Vietnam's population in 2010 reached 89 million respectively 280 million visits of health care, ranking the third in Southeast Asia in terms of medical visits

Health care needs in the large cities like Ho Chi Minh City, Hanoi are 5-10 times higher compared to other areas duc to large population Futhermore, the number

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of DE Ste eather provinces nationwide flocks to these cities because the health care system here ts the best in the country

1.3.2 Actual situation of Vietnam’s health sector

1.3.2.1 Achievements

- In recent years, Vietnam's health sector has made significant progress in health

constmiction of the network of medical facilities and health staff around the country

- Currently, the Health system of Vietnam has met more than 250 million visits / year (average of 2.5 times / person / year), more than 70 million inpatients (average of 8 days / | patient)

- The health sector has concentrated on developing high technology, equal to regionally and internationally such as a modern diagnostic imaging, diagnostic early detection and treatment of cardiovascular intervention, brain, organ transplants, laparoscopic surgery, Phaco surgery (eyes), spinal cord, vitro fertilization

- At present medical system of Vietnam is constantly evolving with 876 hospitals, 75 nursing and rehabilitation centers, over 1,000 clinics and local maternity homes Besides, the state health facilities have started to form a system

of private health branches, including 19,895 medical facilities, 14,048 pharmaceutical establishments, 7,015 facilities of traditional medicine, five foreign invested capital hospitals that has helped alleviate the overload at the state hospitals

- Each year thousands of doctors and pharmacists who graduated from Medical Universities have distributed across the country to add health branches network, reaching 80% hamlets and 100% communes

- In order to limit the difference in number and level of physicians between regions, the health sector has made training courses for priority areas

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1.3.2.2 Shortcomings

According to data on Human Development Index - HDI of the United Nations Development Programme (UNDP) announced late in 2009, Vietnam ranked very low - No 108 (0.704) among the 177 countries HDI is a standard index of quality of life in which the life expectancy factor is important The above Vietnam's HDI shows that human health problems, especially in big cities like

Ho Chi Minh City, have not been looked after and properly invested What are the main causes?

1.3.2.2.1 Infrastructure

- The infrastructure of the health sector has still had a lot of defects The overload

in big hospitals is now so intense and tends to worsening happenings which have affected the quality of medical work Causes are due to not only increasing population but mainly planning, developing, arranging health care network, especially the standby medical lines and medical facilities are not comprehensive and can not meet needs of society as well as many obstacles and difficulties of policy mechanisms

- Ho Chi Minh is densely populated city The latest survey in 2010 showed that the population in Ho Chi Minh City was 9.3 million, density 3,419 people / km ? The density of density is too high in central districts plus the outbreak of social vices (prostitution, drugs) and environmental pollution has increased the demand for health care Meanwhile, the city's healthcare system has overloaded for many years The rate of beds / 10,000 people is 41, the city has had about 60 hospitals,

320 clinics and five maternity homes, but the distribution is not reasonable, mainly in the inner city In addition to the public health system, Ho Chi Minh City has more than 2,300 private health facilities and nearly 1,500 private pharmaceutical establishments The overload has been reduced partly in the big

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of users, so the equipment has not been exploited properly According to a survey

by World Health Organization (WHO), up to 50% of medical technology in developing countries imported trom developed countries has not been used for its full capacity because the users are not adequately trained WHO recommends "A dollar spent on training for users will get the sum of money that is many times higher than the money spent."

Besides, medical equipment in our country is problematic when most medical equipment used at medical facilities has not been regular tests, maintenance and repair because there is a lack of high qualified technicians and testing standard equipment

Through a survey at a 1,000 — bed general hospital in Ho Chi Minh City, "The hospital has 35 departments with 168 doctors, 4 pharmacists Compared to the size of beds and medical needs of the people, the hospital lacks about 122 doctors and 20 pharmacists Shortage of doctors, pharmacists has created significant

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hospital director said

There are many reasons to evaluate the above real situation

attract doctors, pharmacists and leading specialists A director of the Health Service said, “The medical profession is a profession is specially trained, but there have not had special policies to attract and use, thus lead to serious shortage of doctors, pharmacists today, especially in the standby health system and district hospitals."

have higher education, but after graduation, these qualified doctors said to

"goodbye" their hospitals to work for central hospitals or where their income is

higher

2030

orientation In medical sector, the government always makes effort, persevers and clarifies health objectives: Equity-Efficiency-Development

of total health expenditure

stages of standby Medicine, ensuring adequate resources for standby Medicine

is not less than 30% of total resources Organizing network of standby Medicine as covering districts and communes

advanced level of regional and international levels for effective prevention and treatment for Vietnames people

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groups Actively strengthening health facilities Limiting and eliminate cases of unnecessary referrals

balance of the Health Insurance Fund Perform quality of medical care and satisfy health insurance patients

levels Emphasize to ensure birth health care, safe contraception, and safe motherhood Gender balance and gradually raise population quality

top 500 International University, at least one University of Medicine by 2015;

at least two Medical Universities by 2020; doctors working in communes: reaching 80% in 2015 and covering 100% in 2020

for pharmaceutical industry, striving to total production value of the total value

of drug use: in 2015 reach 70-75% and reach 95-100% in 2020 There are strong brand pharmaceutical exports Through import and export activities ensure to satisfy domestic demand

For production of medical equipment, striving to implement objectives of the national policy on medical equipment, issued by the Prime Minister's Decision

No 130/2002/QD-TTg, dated October 4", 2002, reaching 40% in 2015 40%, and 60% in 2020

Management: strive to improve the overall capacity, both macro and micro; improve laws and policies to ensure the State management and implementation advantages, people arc satisficd, stop corruption and waste For micro- management, management staff units (hospitals, institutes, schools .) must have credit of management training; management of each unit must have at least one professional staff

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Strong Nation — Equitable, Democratic and Civilized Society", environmental protection and gradual recovery "Green - Clean - Beautiful" (emphasis on

restoring forests, rivers )

of all policies and regimes Health sector ensures health care for the people keeping pace with regional countries (top 3) and international ones (top 20)

Pharmaceutical human resources, Medicine, Pharmacy products

1.4.2 Some government regulations on the establishment of health facilities

- Ordinance No.07/2003/PL-UBTVQHI11 dated February 2, 2003 by the Standing Committee of the National Assembly on the issuance of medical or pharmaceutical practice

- Decree No.103/2003/ND-CP dated September 12, 2003 by the Govrnment on the detail regulations for some articles of the Ordinance on the Practice of private Medicine, Pharmacology

- Decision No.44/2005/QD-BTC dated July 12, 2005 on the provisions for the collection, remittance, management and use of conditional medical trading evaluation fees, criteria evaluation fees and conditions for practicing Medicine and Pharmacology, license issuing fees for export, import and cerificate of the practice of medicine and pharmacy

- Circular No 07/2007/TT-BYT dated May 25", 2007 by Ministry of Health guiding the practice of private medicine, traditional medicine and medical equipments

1.5 Necessity for development strategy planning of Vinamilk’s health service

To overcome the shortcomings of the health sector in Vietnam in general and strive to become a leading enterprise in the sector in providing health care services, it 1s essential for Vinamilk to work out a strategy for its long-term

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eR GAM : Specia WP for fe period 2011-2020 based on the theoretical basis

of the strategy This section will be presented in the following chapters

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PCE AP PERS: DEVELOPMENT STRATEGY PLANNING FOR

VINAMILK’S HEALTH SERVICE

155/2003/QD-BCNissued by the Ministry of Industry

company under the Law on Enterprises of Socialist Republic of Vietnam according to Business Registration Certificate No 4103001932 issued by the Planning and Investment Department of Ho Chi Minh City

e The Company was subscquently listed on the Ho Chi Minh City Stock

Exchange on 19 January 2006 according to the Listing Licence No 42/UBCK-GPNY dated 28 December 2005 issued by the State Securities Commission

VIETNAM DAIRY PRODUCTS JOINT STOCK COMPANY (Vinamilk)

COMPANY

Minh City, Vietnam

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Business registration certificate no 0300588569 dated 20 August 2010 issued by the Planning and Investment Department of Ho Chi Minh City (approving the increase in share capital)

y Principal Activities:

drinks, bottled milk, powdered milk, nutritious powder and other products from muk;

cultivated crops, guidance on cultivation techniques, cultivation harvest and supply of breeding animals and breeding techniques;

» Subsidiaries and Associaties:

In 2010, Vinamilk has the total of 13 subsidiaries, 6 subsidiaries and associates:

Ha Noi Branch, Da Nang branch, Can Tho branch, Truong Tho Dairy Factory, Thong Nhat Dairy Factory ., An Khang Clinic

Vietnam Dairy Cow One Member Co., Ltd., International Real Estate One Member Co., Ltd., Lam Son Dairy One Member Co., Ltd.,

2.1.1.1 Company Performance

In 2010, the total sales reached VND16,081 billion, the profit after tax reached VND3.616 billion déng and the owners’ equity reached up to VND7,964 ty billion Vinamilk is the first Vietnamese company to be one of the Asia’s top

200 Small and Midsize Companies by Forbes The Forbes’s list 2010 is special because of the presence of the first and unique Vietnamese company, Vinamilk

It also reported that 2010, Vinamilk earned USD 575 million, ranked 16th among the Top 200 Profit before tax reached to USD 129 million, ranked 18th among

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31th among the Top 200

Dividend per share (VND)

international technology to improve the production capacity to meet the market demand;

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ultimate standards of such quality management systems as ISO, HACCP;

losses to the Company and its shareholders;

friendliness and social responsibility

- Investing and developing health service in the period 2011 — 2020

2.1.1.3 Awards achieved in 2910

2.1.2 An Khang Clinic Information — A subsidiary of Vinamilk

2.1.2.1 Initial information

In 2005 health care needs in the nation, particularly in Ho Chi Minh City area was blooming While the forces of health facilities were poor and always in overload and there was the lack of high quality health care services all over the nation at that time Mrs Mai Kieu Lien, the president of Vinamilk, found that this was the potential business opportunity that Vinamilk should have invested in From this idea, Vinamilk starts engaging into the very new and fresh activity but attractive with establishment of An Khang Clinic The clinic officially put into operation on June 6", 2006 at 87A, Cach mang thang 8 Street, Ben Thanh ward, District 1, Ho Chi Minh City, Vietnam

2.1.2.2 Outstanding Features

Despite being given late birth and having a small scale compared to public hospitals, An Khang Clinic immediately has received the attention of the majority of urban inhabitants journalists and other large hospitals due to the

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de QTR SELF EAE SY SHO Rhe bold idea of Dr Nguyen Tien Dung That

is the application of modem electronic software in healthcare

Wishing to contribute to modernization of the health system in Vietnam, An Khang Clinic has launched a new breakthrough in the electronic management of customers and patient records, meeting demand for those who are interested in their health but do not have much time to go for a medical examination

An Khang Clinic’s motto always meets the needs of high quality health care and saves maximum time for customers, it focuses on investing in the best and most modern medical equipment and installations to serve the medical examination and treatment fastest, most easily accurately and conveniently

The short examination process saves precious time of customers The customers

do not have to waste time waiting and spending the complicated paperwork, they just put smart card AKC into the machine to be identified and go directly to the consulting room with their doctors

2.1.2.3 Service products

An Khang Clinic has following medical departments: Internal Medicine, External

Gastroenterology, Pulmonology and Sleep Help, Cardiology, Hepatology, ENT (Ear — Nose — Throat), Dermatology, Referral for emergency

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increasingly gained the trust of patients, the examination turns have continuously

An Khang Clinic has

increased to reach 86 thousand tn 2010

In 2010 An Khang Clinic An Khang honorably received the brand "The Best of Victnam in 2010" voted by the customers, Saigon Marketing Magazine

This is the basis for Vinamilk to have a strategic planning for developing its health service in the next period

Profit / Total Sales 5.0% 3,0% 1,0% 49 5% Examination and Treat (turns) 86.412 65.340 54.000 12,5%

Source: Financial Statement 2008 — 2010

period 2011 — 2020

The reason that Vinamilk plans the investment strategy on development of the health service is due to the success of An Khang Clinic, the subsidiary of Vinamilk It has increasingly gained the trust of patients in recent years and this confirms that Vinamilk’s investment orientation on the health service is correct With the market share of Vinamilk increasingly consolidated and expanded under which customers of Vinamilk has also increased Morever, the financial resource of Vinamilk guarantees the development of its health service So

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ViôhhbPHSUUS nước BE development strategy of health service in the period of 2011 — 2020

2.2.1 Vision, Mission and Goals

Vision: To become the leading Vietnamese trusted brand on health care SŒTVICC

Mission: Vinamilk commits to bring the communities the best —quality health care service due to responstbilities and love and destre to receive happy smiles of every patient

Goals in the period 2011-2020:

Bring the satisfaction of patients

Become a leading company in supplying “telemedicine” service in Vietnam

Increase “telemedicine” network, sales and profit

2.2.2 Analysis of External Factors Affects Development Strategy of Vinamilk’s Health Service — Internal Factor Evaluation (EFE) Matrix

2.2.2.1 Analysis of Macro Environment

2.2.2.1.1 Economic Factors

In 2010, Vietnam's economy continued to rebound quickly from the impact of the global economic crisis Gross Domestic Product (GDP) in 2010 increased by 6.7%, higher than the target (6.5%) The national income per capita in 2010 was estimated at $ 1,160 The average income increased, spending of individuals on health care services also increased According to the forecast by General Statistics Office, the spending rate for these services in the period 2010-2020 will increase by 30% compared with the period 2001-2010 This is a great opportunity for Vinamilk to invest more into health care services, especially high-quality services

However, the high economic growth leads to relevant issues such as rising prices

of commodities, water and electricity, gas and increase of exchange rate of USD /

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VE GORIRERSHOF HERES ES Medical equipment is imported) will increase business costs, affecting the economic efficiency of enterprises

2.2.2.1.2 Social, Cultural and Environmental Factors

According to General Statistics Office, the population in 2020 will increase by 1$% compared to 2010, in which Ho Chi Minh City area will increase by 17%, this makes the demand for health care increase in the period 2010 — 2020

The amount of people concentrating in big cities like Ho Chi Minh City will continue te increase and bring about increase of social evils like prostitution, robbery, theft, environmental pollution, food poisoning, epidemics, incurable diseases like cancer The industrialized lives make people frequently be in tension, fatigue, complex and diseases of body disorders also increase, this would

be a huge burden for the system of health facilities throughout the country especially Ho Chi Minh city area where has become overloaded Yet, if Vinamilk invests to expand its operation in the medical field, this is the opportunity to exploit the market

- Besides, in the era of globalization, more and more foreigners are living and working in Ho Chi Minh City and urban living standards is increasing significantly This requires health facilities to provide high quality health care services

- More and more people are interested in their health, they understand the value

of health so they often go to the health facilities to examine and treat promptly

- The higher the life expectancy of people is, the more the demand for medical examination and treatment is

2.2.2.1.3 Political and Legal Factors

The stable political environment and goverment policies on development priority

in the health sector have created favorable conditions for Vinamilk to attract investment in this field However, it also presents a challenge because the investors can associate with other businesses in building international standard hospitals and

clinics

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Some health care development policies oriented until 2020 have beneficially become for businesses to invest in the health sector such as policies of training talent for health sector, investment in medical technology, development for pharmaceutical industry and medical equipment, strong implementation of health insurance legislation cnabling all people to be examinated and treated

Yet, the price management policies and quality of pharmaccutical products today have not closed, the prices remain high and the quality of drugs does not guarantee that affect the quality of health care quality and reputation of

businesses

2.2.2.1.4 Technological Factors

The growth of medical science has helped local businesses approach the methods

of diagnosis and modern treatment which can help to cure incurable diseases which previously could not cure This helps to bring confidence to patients and increase the prestige of the local medical facilities

The success of treatment such as endoscopic surgery, lithotripsy to microsurgical technique of shaping, application of laser technology in medicine, accelerators in cancer treament, success of vitro fertilization, successful application of cardiac techniques such as open heart surgery, heart valve replacement, heart chamber

arrhythmias, etc

Recently, the initial success of first liver transplantation in Vietnam transplanted from the "brain death" at the Vietnamese-Germany Hospital has added further hope for those who have fatal diseases

In addition, the application of electronic software in medical facilities has helped

to have better management of medical records, pharmacy, hospital fees, and

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more satisfaction to patients

2.2.2.1.5 Globalization

The issue of globalization has posed many new opportunities and challenges for the health service of Vinamilk, competition in treatment technology not only locally but also internationally The world closing together has made many patients in Vietnam come to foreign countries for medical treatment where health

care conditions are much better

However, this is also the apportunity and challenge for Vinamilk’s physicians to acquire more knowledge about medical examination and treatment from training courses aboard to improve high-qualified ability of Vinamilk’s medical staff

2.2.2.2 Analysis of Industrial Environment

2.2.2.2.1 Threat of Entry of New Competitors

In recent years, the health care needs of Vietnamese people have been quite high, especially in urban areas, while the health care conditions of health facilities have not guaranteed, the overload has made the industry become a promising business for any investor, especially foreign investors who have desired to invest in Vietnam because of the stable political environment, economic growth, increasing income of people

Those are the reasons why there have now been many international hospital projects in the period of planning and implementing such as Cancer Hospital, branch 2 in District 9, City Mental Hospital project, relocation project of Saigon Hospital, project of University Institute of Medicine (100 ha) in the West — North urban area, Thu Duc hospital in the East with a 1000-bed scale, Children's City Hospital in the West with 1000 beds, General Hospital in Cu Chi in the North with 1000 beds; General Hospital in Hoc Mon area in the North with 1000 beds

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