Sao Nam An corporations competitive strategy for Brother printer Vietnam

The work was completed in Feb 2012, in Ho Chi Minh City - Vietnam candidate’s name and signature NGUYEN THI HOAI TRANG Formatted: Centered, Indent: Left: 8.89 cm, First line: 1.27 cm

MBAVB4

NGUY N TH HOÀI TRANG

Sao Nam An Corporation’s competitive strategy

for Brother printer Vietnam

MASTER PROJECT MASTER IN BUSINESS ADMINISTRATION

(PART-TIME)

Ho Chi Minh City

DECLARATION

This thesis is a presentation of my original research work Wherever contributions

of others are involved, every effort is made to indicate this clearly, with due

reference to the literature, and acknowledgement of collaborative research and

discussions

The work was done under the guidance of Dr LE THAI THUONG QUAN, under

the framework of the the Master program in Business Management – The join

Masters Program between Ho Chi Minh City Open University (Vietnam) and

Solvay Brussels School (Belgium) The work was completed in Feb 2012, in Ho Chi

Minh City - Vietnam

(candidate’s name and signature)

NGUYEN THI HOAI TRANG

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I would like to formally thank Mr Khanh –Sale manager of Sao Nam An JSC, for helping me understand his company’s business and Ms Thuy - CFO of Sao Nam

An JSC for providing me with necessary information

I wish express gratitude to all my classmates MBVB3 I wish to say that the last two years have been quite an experience to me and all of you have made it for me Next I want to thank to all the members of my dear group 4A and 4B, I want to say that we were always together, supporting each other in our assignments, I feel lucky

TUTOR’S COMMENTS

The topic is practical and the author has shown her best effort to finish this project

In current state, both the content and the presentation are still very weak However, take into account her situation and with the recognition of her efforts, I confirm that

I agree for this project to be allowed to go to public presentation

Le Thai Thuong Quan

EXECUTIVE SUMMARY

Sao Nam An is a business company in distributing office equipments, and belongs the Sao Nam Group with major market in Ho Chi Minh City and neighborhoods Sao Nam An is one of the exclusive suppliers of Brother printers in Vietnam Besides, it is also the distributor of some other companies such as Konical, Panasonic, SanYo

In the difficult context of economics, and under the pressure of the supplier that Brother want to increase the market share of printer in Vietnam, Sao Nam An need to research and give out a efficient competitive strategy in order to develop market of Brother’s printers and multi-function printers This is also the major research of the thesis

The thesis introduces basically operation, personnel as well as some financial information in order to make readers have a general view of current status of Sao Nam An, Then the author applies analysis tool “five forces” of M.Porter to analyze not only the industry but also current competitors of Sao Nam An Besides, the author also analyzes the potential abilities inside as well as advantage of Sao Nam

An in order to give out appropriate solutions

After analysis, based on specific feathers in business that supplier like Sao Nam An can not change products it distributes in a close market like Southern area, focus differentiation strategy of M.Porter is the optimal solution It is the strategy to break into the current market, and is to find out how to develop the share of products through marketing solutions In order to carry out this solution, the author analyze and determine the areas which Sao Nam An need to make different: expanding the distribution channel, improving the quality of services, co-operating with supplier Brother to give out marketing strategy in order to popularize the trade name, to attract the customers and apply ERP system into company management to reduce the cost and bring more benefits The detail activities needed to deploy the strategy will be presented specifically in functional strategies such as personnel, marketing and advanced technology

TABLE OF CONTENT

CHAPTER 1 : INTRODUCTION 1

1 The need of research 1

2 Scope of the thesis 3

3 Structure of thesis 3

CHAPTER 2 : THEORETICAL BACKGROUND 4

1 What is competitive strategy? 4

2 Industry analysis 4

3 Type of strategies 8

CHAPTER 3 : CURRENT SAO NAM AN SITUATION 12

1 Introduction about Sao Nam Group 12

2 Introduction about Sao Nam An 14

2.1 History 14

2.2 Business function 15

o Wholesale 16

o Retailsales 16

o Project 16

o Warranty: 17

o Maintenance 17

o Equipment renting 17

o Traning/consultancy 18

2.3 Focused product list 18

2.4 Human resource 18

2.5 Distribution channels 21

2.6 Customer Segments 21

a Wholesales 21

b Project 22

o Sales 22

3 Industry analysis 25

3.1 Five Porter 25

a Barries to entry (high) 25

b Substitue products (high) 26

c Bargaining power of buyers (high) 27

d Bargaining power of suppliers (low) 29

e Rivalry among existing competitors (high) 29

4 Competitor analysis 31

5 Internal factors 35

5.1 Value chain 35

5.2 SWOT 38

6 Product analysis 39

6.1 Secondary data 40

6.2 Concluding 42

7 Customer analysis 42

CHAPTER 4 : COMPETITIVE STRATEGY TO INCREASE COMPETITIVE ADVANTAGES 45

1 Identify strategy 45

2 Choosing competitive strategy 46

2.1 Cost leadership 48

2.2 Differentiation 49

3 Steps in Differentiation 49

4 Function strategies 56

4.1 Strategy towards Customers and Supplier 56

a Customers 56

b Brother Supplier 58

4.2 Marketing 58

a Overall marketing strategies 59

b Product 59

c Price 60

d Place 60

e Promotion 61

4.3 Human resource 62

4.4 Techonology innovation 65

APPENDIX 68 1 Macro environment 68

1.1 Macro economy 68

1.2 Overview domestic printer market 69

1.3 Analysing financial situation 72

2 Financial items 74

3 Customer list 75

4 Distribution channel 77

5 Product lists 79

PREFERENCES 81

Figures

Figure 1: Income of categories 2

Figure 2: Five forces Porter model 5

Figure 3: There Generic Strategies 9

Figure 4: Differentiating Features That Raise the Performance a User Gets 11

Figure 5: Structure Organization of Sao Nam Group by area 13

Figure 6: Organization chart of Sao Nam An 19

Figure 7: Percentage distribution of employees 20

Figure 8: Increase of employees in years 21

Figure 9: Sale volumes of Sao Nam An in 2008-2010 23

Figure 10: Sale volumes of product categories in 2008-2010 24

Figure 11: Printer sales distribution by type of business 2010 25

Figure 12: Company organization structure (offered model) 64

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CHAPTER 1 : Tình hình kinh doanh c a công ty Sao Nam Song Han 4¶

1 Gi i thi u v công ty Sao nam 4¶

2 Kinh doanh và tình hình tài chính c a chi nhánh à N ng _ Công ty Sao Nam Sông Hàn 8¶

CHAPTER 2 : Tài s n 8¶

CHAPTER 3 : Nhân l c 8¶

CHAPTER 4 : Hình th c v n chuy n 8¶

CHAPTER 5 : Phân tích các y u t tác

đ ng 10¶

1 Môi tr ng v mô 10¶

2 Môi tr ng kinh doanh 11¶

3 N i l c tác đ ng 12¶

CHAPTER 6 : i u tra nh n th c và hành vi tiêu dùng c a khách hàng l và doanh nghi p 13¶

1 Mô hình kh o sát 13¶

2 M u kh o sát 13¶

3 B ng câu h i 13¶

4 Phân tích k t qu 13¶

CHAPTER 7 : M t s gi i pháp nâng cao

n ng l c c nh tranh c a công ty 13¶

CHAPTER 1 : INTRODUCTION

1 The need of research

Sao Nam An is a subsidiary company of Sao Nam Group, operating in office

equipments business with the main markets in HCM city and other neighbour

provinces The firm is one of the two official distributors of Brother in printers and

multi-function machines in Viet Nam Moreover, Sao Nam An is also the exclusive

distributor of Konical Molnital in Photocopy marchines and of Panasonic, Sanzo in

cameras, projectors…

Based on the report of IDC, the market share of Brother in printers in

Vietnam is still small with approximately 2% by 2010 According to its

development strategy for the next time, Brother will especially take care of

emerging markets and strive for the position of the second leading vendor in

VietNam Brother hopes that its sale rate in developing countries will go up to 64%

by 2015 from the level of 50% by 2008 And for Vietnam, Brother expects that the

market share will increase to 20% in future, this increase includes 15% in mono

laser printer and 5% in inkjet and multifunction machines

For this reason, Brother is going to invest more capital to raise its market share

in Vietnam In fact, Brother has already established many warranty centers in HCM

city, Ha Noi, and a Nang In order to achieve the goal, Brother requires its two

distributors in Vietnam, Sao Nam Group and Silicom, to review their development

strategies Hence, as an official distributor, this is not only an opportunity for Sao

Nam An to receive more support from Brother Supplier but also a challenging

mission for it if Sao Nam An wants to keep its monopoly distribution position,

especially when Brother Products have occupied more than 30% of Soeco’s

portfolio of and have average growth rate of 75 percent every year

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Máy photocopy Konical

SanYo CCTV SanYo LCD Project

S n ph m khác

2008 2009 2010

Figure 1: Income of categories

While the echo of financial crisis in 2008 has not reduced absolutely, Vietnam

economy has been facing a lot of difficulties in subsequent years The current

Europe debt crisis with tightening budget policies of European governments and

the economic depression of America…have had a significant negative effect on our

home market In addition, inflation, exchange and interest rate are too high bulding

up difficulty to firms The Input costs have been raising whereas the output has been

decreasing due to less consuming of customers in recent years As we can see,

internal and external difficulties have surrounded the firms The factors mentioned

above have brought many small companies in capital to the verge of bankruptcy At

this point, the government has promulgated many policies to reduce the

governmental budget expense to help the economy go through the difficult

situation According to the Economic Committee report, by the first six months of

2011, there were 30% firms going bankrupt, many other survivers had to reduce

their production sizes Hence, it is necessary for companies to review their internal

forces and restructure themselves to overcome this tough period

Under the difficult situation of present domestic economy, along with the

critical competitive situation in Vietnam market and Brother‘s heavy requirement,

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Sao Nam An understands that it is neccessary to review the developing strategy and

to consolidate the internal forces in order to keep its sole distribution position and to

expand its market

In this study, researcher will establish a competitive strategy for Brother

Products containing laser printer to help Sao Nam An complete their mission

2 Scope of the thesis

The scope of this thesis will be limited to the analysis in current operating

situation of Sao Nam An and its financial capability to propose some competitive

advantage solution in order to increase its competitive competence level in printer

and MFC sector The main markets of Sao Nam An is Ho Chi Minh city and

neighbour provinces including Binh Duong, Vung Tau, Dong Nai, Tay Ninh, Binh

Phuoc, Ninh Thuan

3 Structure of thesis

The thesis has four chapters, chapter one introduces why the project becomes an

objective to be researched and the scope of the study Chapter two brings about the

theoretical background that the researcher applied The introduction about Sao Nam

An Company and its currency situation are illustrated in chapter three Finally,

chapter four provided a particular competitive strategy to help Sao Nam An

increased the market share of Brother printer in VietNam market

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CHAPTER 2 : THEORETICAL BACKGROUND

The reality of the world economy shows that there is an intimate relationship

between the development of a firm and its environment, its internal forces as well as

its developing strategy In order to exist and develop, each firm has to exploit as

fully as possible its competitive advantages The theories that are presented below

will be the basement to analyse current situation of Sao Nam An and build

competitive strategy to expand Sao Nam An’s business market

First of all, it is a requirement to understand the strategy concept and the

importance of strategy planning to a company’s development After that, the thesis

will proposed which tools to analyse a firm’s situation and how to build an effective

strategy In this thesis, the reseacher will apply M.E Porter theory as her research’s

basement

1 What is competitive strategy?

There are a lot of concepts of management theorist to define strategy

However, strategy is basically about two things: deciding where you want your

company to go, and then how you want to take it there

According to Dr M.E Porter, competitive strategy is the search for a favorable

competitive position in an industry, the fundamental arena in which competition

occurs Competitive strategy aims to establish a profitable and sustainable position

against the forces that determine industry competition

2 Industry analysis

Porter’s theory emphasizes the improtance of industry analysis in the process

of establishing business strategy Porter developed a model called “Five forces

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In fact, no industries could be similar to others in aspects of profitable ability Some industries bring low profit like steel and paper industries while others could bring high benefits like cosmetic and gas industries Some industries are very difficult to enter such as mining, petroleum, aircraft manufacture, medicine, electronics industries because they are required an initial investment in technology, experience and a great of capital Some industries have few barriers such as food and fashion industries This leads to the fact that the quantity and size

of companies are different in different industries Since then, the level of competition among competitors in each sector is also different One of the most popular theories, the most obvious analysis of the forces of competition and industry structure that makes the "5 Forters" by Michael Porter ¶ According to M.E Porter, there are two basic types of competitive advantage a firm can posses: cost leadership or differentiation Two competitive advantages combined with the scope of activities for which a firm seeks to achieve them lead to three generic strategies for achieving above-average performance in

an industry: cost leadership, differentiation, and focus ¶

t o ra đ c m t l i th c nh tranh so

v i các đ i th , công ty ph i ch n l a m t trong ba chi n l c trên đ phát tri n, t o

d ng v th trong dài h n và t o ra k t qu kinh doanh v t tr i cho mình M i m t chi n l c đ u có nh ng thu n l i c ng

nh r i ro riêng, đi u quan tr ng t i u là

l a ch n đ c m t chi n l c c nh tranh phù h p đ giúp công ty có l i nhu n cao.¶ [2]

model” which helps to identify the features of industry that determines the strength

of the competitive forces and hence industry profitability

This analytical technique will help a firm analyze its industry as a whole and

predict the industry’s future evolution to understand its competitors and its own

position, and to convert this analysis into a competitive strategy for a particular

business

Figure 2: Five forces Porter model

The five competitive forces are entry, threat of substitution, bargaining power

of suppliers, bargaining power of buyers, and rivalry among existing competitors

Now let’s look at each of these five forces in more detail

• Threat of new competition

Profitable markets that yield high returns will attract new firms This results in

many new entrants, which eventually will decrease profitability for all firms in the

industry Unless the entry of new firms can be blocked by incumbents, the abnormal

profit rate will tend towards zero (perfect competition)

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The threat of entry into a industry depends on the barriers to entry and coupled

with the reaction from existing competitors that the entrant can expected There are

six major sources of barriers to entry: economies of scale, product differences,

capital requirements, switching costs, access to distribution channels, cost

disadvantages independent of scale like proprietary product technology, government

subsidies…

• Threat of substitute products or services

The existence of products outside of the realm of the common product

boundaries increases the propensity of customers to switch to alternatives Note that

this should not be confused with competitors' similar products but entirely different

ones instead For example, Pepsi is not considered a substitute for Coke but water,

tea, and coffee are

− Buyer propensity to substitute

− Relative price performance of substitute

− Buyer switching costs

− Perceived level of product differentiation

− Number of substitute products available in the market

− Ease of substitution Information-based products are more prone to

substitution, as online product can easily replace material product

− Substandard product

− Quality depreciation

• Bargaining power of customers (buyers)

The bargaining power of customers is also described as the market of outputs:

the ability of customers to put the firm under pressure, which also affects the

customer's sensitivity to price changes

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− Buyer concentration to firm concentration ratio

− Degree of dependency upon existing channels of distribution

− Bargaining leverage, particularly in industries with high fixed costs

− Buyer switching costs relative to firm switching costs

− Buyer information availability

− Availability of existing substitute products

− Buyer price sensitivity

− Differential advantage (uniqueness) of industry products

• Bargaining power of suppliers

The bargaining power of suppliers is also described as the market of inputs

Suppliers of raw materials, components, labor, and services (such as expertise) to

the firm can be a source of power over the firm, when there are few substitutes

Suppliers may refuse to work with the firm, or, e.g., charge excessively high prices

for unique resources

− Supplier switching costs relative to firm switching costs

− Degree of differentiation of inputs

− Impact of inputs on cost or differentiation

− Presence of substitute inputs

− Strength of distribution channel

− Supplier concentration to firm concentration ratio

− Employee solidarity (e.g labor unions)

− Supplier competition - ability to forward vertically integrate and cut out the

BUYER

• Intensity of competitive rivalry

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For most industries, the intensity of competitive rivalry is the major

determinant of the competitiveness of the industry

− Sustainable competitive advantage through innovation

− Competition between online and offline companies

− Level of advertising expense

− Powerful competitive strategy

3 Type of strategies

In fact, no industry can be similar to others in profitibility Some industries

such as steel and paper industries gain low profit while others like cosmetic and gas

industries have high profit earning Some industries have high entrance barrier such

as mining, petroleum, aircraft manufacture, medicine, electronics industries because

these industries require the entrants heavy initial investment in technology, a lot of

experience and a great deal of capital Some other industries have low barriers such

as food and fashion industries This leads to the fact that the quantity and size of

companies as well as the level of competition differ from industry to industry Since

then, the levels of competition in different areas are also various from each other

According to M.E Porter, there are two basic types of competitive advantage a

firm can posses: cost leadership or differentiation Two competitive advantages

combined with the scope of activities for which a firm seeks to achieve them lead to

three generic strategies for achieving above-average performance in an industry:

cost leadership, differentiation, and focus

In order to create competitive advantages, a firm has to choose one out of three

general strategies to establish its position in long term and create outstanding

business results Each strategy has its own advantages and difficulties, the firm’s

mission is to find out the most suitable strategy which helps to gain high profit

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Figure 3: There Generic Strategies

• Cost leadership strategy

This strategy is to achieve overall cost leadership in an industry through a set

of functional policies aimed at this basic objective Cost leadership requires

aggressive construction of effcient-scale facilities, vigorous pursuit of cost

reductions from experience, tight cost and overhead control, avoidance of marginal

customer accounts and minimization in areas like R&D, service, sales force,

advertising, and so on

Having a cost-leadership position yields the firm above-average returns and

defends the firm against all five competitive forces in its industry Becauses,

low-cost position places the firm in a favorable position vis-à-vis substitutes relative to

its competitors, provides the flexibility to cope with input cost increases and creates

an entry barrier in term of cost advantages

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A firm that wants to apply this strategy successful often requires a high relative market share or heavy capital investment and other advantages, such as favourable access to raw materials

• Differentiation

In contrast to the cost leadership strategy, implementation of a differentiation strategy means that value is provided to customers through the unique features and characteristics of a company's products or services rather than by the lowest price Because differentiated products or services satisfy customers' unique needs or preferences, companies can charge premium prices for differentions

For the company to be able to outperform its competitors and earn average returns, the price charged for the differentiated product must exceed the cost of differentiation In other words, the price charged must exceed total product cost Because of this, the differentiated product's premium prices generally exceed the low price of the standard product

Companies that follow a differentiation strategy concentrate or focus on product innovation and developing product features that customers value rather than

on maintaining the lowest competitive price (as is the case for the cost leadership

strategy) In order to successfully application of a differentiation strategy, a

company must consider its value chain of primary and secondary activities and effectively link those activities as illustrated in Figure 4

Differentiating Features That Raise the Performance a User Gets

To enhance the performance a buyer

gets from using its product/service, a

company can incorporate features

and attributes that

Provide buyers greater reliability,

durability, convenience, or ease of

Meet the buyer's needs and requirements more completely, compared to competitors' offerings Give buyers the option to add on or

to upgrade later as new product versions come on the market

use

Make the company's product/service

cleaner, safer, quieter, or more

maintenance-free than rival brands

Exceed environmental or regulatory

standards

Give buyers more flexibility to tailor their own products to the needs of their customers

Do a better job of meeting the buyer's future growth and expansion requirements

Figure 4: Differentiating Features That Raise the Performance a User Gets

• Focus

The generic strategy of focus rests on the choice of a narrow competitive scope within an industry The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others

The focus strategy has two variants

(a) In cost focus a firm seeks a cost advantage in its target segment, while in (b) differentiation focus a firm seeks differentiation in its target segment Both

variants of the focus strategy rest on differences between a focuser's target segment and other segments in the industry The target segments must either have buyers with unusual needs or else the production and delivery system that best serves the target segment must differ from that of other industry segments Cost focus exploits differences in cost behaviour in some segments, while differentiation focus exploits the special needs of buyers in certain segments

CHAPTER 3 : CURRENT SAO NAM AN SITUATION

1 Introduction about Sao Nam Group

Sao Nam Group has six subsidiary companies operating in perigraphy

distribution business such as copier, camera-assess system, printer, MFC … of

many famous manufactures on the nation scale including Brother, Konical Minolta,

Sanyo, Panasonic Sao Nam Group has the nationwide agents network with more

than 350 companies Up to this day, Sao Nam Group has had more than 50 product

categories distributed and 40 product categories had after-sales policies with above

50.000 units shipping

Sao Nam Group has four subsidiary companies among which Sao Nam An

was the first subsidiary company to be founded Each of these subsidiary companies

has its own legal personality, seals, independent economic accountng and

self-control about its finance and operates in limited boundary

1 Sao Nam An service commerce Limited Company is responsible for all

business in HCM city and South area of Vienam

2 Sao Nam Ha Noi company is responsible for all business in HaNoi and North

area of Vietnam

3 San Nam Can Tho company

4 Sao Nam Tien Giang company

5 Sao Nam Song Han Company in Da Nang is responsible for all business in

Da Nang and South-Middle area of Vietnam

Base on the organizational structure, General assembly of shareholder is in

top of Sao Nam Group to control all business of all companies On the one hand, the

board assigns operating boundary, field and board of directors for each company

On the other hand, each company has its own financial ability, human resource as

well as development strategies Sao Nam plays a role of a “parent company” and

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has duty to support other companies belonging to Sao Nam group on every business

aspect An example showing Sao Nam’s parent company role is that whenever a

branch obtains a contract which goes beyond that brach’s financial ability, human

resource or experience, it will be supported by Sao Nam An to execute the contract

Another example is that Sao Nam An pay for its branches all the costs of delivering

goods from Sao Nam An’s warehouse to its branches’ warehouses

Besides, it’s only Sao Nam An who binds to the policy of manufactures that is do not sell any product of other manufactures, others in Sao Nam’s

subsidiary companies don’t have to do such thing Therefore, in case the exclusive

products Sao Nam An provides, for example printers of Brother, don’t meet the

configuration requirements of contractors, Sao Nam An can cooperate with its

subsidiary company in Group to add products of other manufactures like HP or

Canon printers which can satisfy the contractors’ requirements to the bidding

documents In this case, Sao Nam Ab doesn’t break the rule since the subsidiary

company Sao Nam An cooperates with doesn’t have to bind to the policy of Brother

yet still executes the contracts successfully

Figure 5: Structure Organization of Sao Nam Group by area

Sao Nam Ti n Giang

Sao Nam Group (Soeco)

Shareholder

NGUYEN DUY BINH Chairman

Sao Nam Ha Noi Company

Mr inh Thanh Long Director

Sao Nam An Company MR.Lê Hoàng Thái Director

Sao Nam C n Th Company

Mr Nguyen Duy Tan Director

As we can see in the structure organization of Sao Nam Group above, the business

is organized by area We can also see that, among the Soeco’s subsidiary

companies, Sao Nam An company occupies the highest hierarchy And in the scope

of this thesis, researcher will focus only on Sao Nam An company’s operation and

build a competitive strategy solely for Sao Nam An with its operation market in

HCM city and South area of Vietnam

2 Introduction about Sao Nam An

2.1 History

Sao Nam An company – the first company of Sao Nam Group - was founded

in 1997 when most of the indigenous business companies were affected badly by

Asian economic crisis However, Sao Nam An has quickly developed and become

one of the leading companies in office equipments distribution thanks to the suitable

and intelligent development strategies of the company’s managers

Sao Nam An has been the exclusive distributor for many world renowned

organizations From the first days of the company, Sao Nam An was assigned to be

the unique distributor of Minolta photocopier which is now known as Konical

Minolta after the merging between the two companies Konical and Minota Another

famous organization Sao Nam An has been the distributor of is Brother, Brother has

entrusted Sao Nam An with exclusive distribution of inkjet printers, lase printers,

fax machines, MFC multifunction printers and typewriters What’s more, Sanyo

also highly appraises the deep experiences, the professional distribution, and the

broad service network of Sao Nam An Company that it has chosen Sao Nam An as

its monopoly supplier of Sanyo LCD projector, digital camera and observation

system camera – sound - access controller (CCTV)

Untill this day, Sao Nam An has the capital of 35 billions (Dong) and more

than 165 employees including well-educated managers, engineers and executives

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with deep experiences for more than 20 years The company is operating in three

fields: wholesale with wide distribution channel, retailsale and project

Currently,the number of Sao Nam An’s distribution agents in HCM city is above 35

- Printers, fax, MFC Brother

- Photocopy, color photocopy of Konical Minolta

The company operates in three fields involving wholesale, retailsale and

projects in office equipments Besides, the company also provides related services

Sao Nam An imports goods and transfers them to the company’s warehouse

After that, Sao Nam An will distribute those goods to its branches all around HCM

city and the South area Thereafter, each branch will again deliver those goods to

the agents in its area For most of the long transferring such as from HCM to DN or

from HCM to HN, Sao Nam An will have goods transfered by train, and, for the

short ones such as from branches’s stores to agencies’ warehouses, or from

branches’ stores to customers, goods will be transferred by private strucks In some

case, branches will receive goods from manufactures at maritime port

Formatted Formatted

Deleted: Công ty Sao Nam đ c thành

l p vào n m 1997 trong b i c nh các công

ty kinh doanh đang ch u nh h ng n ng

n b i c n kh ng ho ng kinh t Châu Á Tuy nhiên v i t m nhìn chi n l c và mong mu n cung c p đ n ng i tiêu dùng dòng s n ph m chuyên nghi p giúp ti t

ki m th i gian, không gian và quan tr ng

nh t là ti t ki m chi phí, t p th nhân viên Sao Nam đã t o đ c ch đ ng v ng

ch c, đ a Sao Nam nhanh chóng phát tri n, c chi u r ng l n chi u sâu, và tr thành m t trong nh ng công ty d n đ u trong l nh v c Nhà cung c p thi t b v n phòng Sao Nam nhanh chóng phát tri n

c v chi u r ng l n chi u sâu và tr thành

m t trong nh ng công ty d n đ u trong

Bên c nh đó Brother

c ng tin t ng và trao quy n phân ph i máy in laser, máy fax, máy đa ch c n ng (MFC), máy đánh ch cho Sao Nam Kinh nghi m và h th ng phân ph i , d ch v

c a Sao Nam c ng đ c SanYo đánh giá cao và y quy n phân ph i duy nh t t i VietNam v i dòng s n ph m đi n t cao

c p nh Máy chi u SanYo LCD Project, Máy ch p hình k thu t s , và H th ng camera quan sát (CCTV).¶

V i danh m c h n 50 dòng s n ph m hi n đang phân ph i, và h n 40 dòng s n ph m đang có ch đ h u mãi v i t ng c ng h n 50,000 đ n v s n ph m đã đ c bán, Sao Nam group đ c ban qu n tr quy t đ nh

m r ng v i s ra đ i c a các công ty thành viên: ¶

Công ty TNHH TBVP Sao Nam¶ Công ty TNHH Th ng m i d ch v Sao Nam An¶

Công ty TNHH Th ng m i ài Nguyên¶ Công ty Sao Nam t i Hà N i¶

Công ty Sao Nam t i C n Th ¶ Công ty Sao Nam Công ty Sao Nam Sông Hàn¶

Business lines

o Wholesale

Being the official distributor of Japanese equipment Manufactures, Sao Nam

An has a wide agents network on the national scale Its agents will retail electronic equipments in their stores where customers come and buy products These agents buy products from Sao Nam An at wholesale price Generally, they gain 15-20 percentages the value of orginal price for each product

Some famous retailers of Sao Nam An are

- HCM : NguyenKim eclectronic suppermarket, Phan Khang supermarket, Metro Suppermarket, Sang Tao computer company …

o Retailsales

Sao Nam An provides retail services but doesn’t pay much attention to this field while it is worthy to do so Retail customers are mostly firms, offices, government departments whose relationship with Sao Nam An company are established through bidding projects or created by the company’s sales team Sales team have the responsibility to broadcast the company’s image to the public by sending new letters, quoting price of products or inviting people to company’s seminars After getting information of Sao Nam An, organizations as well as individuals can give Sao Nam An orders for goods However, this kind of business

is operated in silence because Sao Nam An doesn’t want to lose its credibility as a distributor in the eye of its suppliers

o Project

Project line is an important part in the business system of Sao Nam An and has generated one third of the income of the company When Sao Nam An company

invited to dender by some organization who has demand for office equipments, sales team will set up a tender document which includes instructions for tendering, form of tender, specification, schedule of rate, contract conditions, quality requirements, presentations After that, the business deputy director has responsibility to review and edit that document The configuration of products and bid price the company offers are two important factors in winning a contract Therefore, it requires experienced and excellent manager

Service

Warranty is an after-sale service Sao Nam An offers its customers for every product The company has been the first supplier to provide three year warranty service in VietNam in two forms: directly or through Sao Nam An’s agents

In order to help customers be able to use the full capacity of office equipments they have purchased, Sao Nam An provides customers mainternance service which is applied only after the warranty time of the product is over Besides, customers can make a maintenance contract with Sao Nam An to keep track of the maintenance process

o Equipment renting

Sao Nam An provides office equipments renting service by two ways of calculating price: lump-sum price or time dependent price The renting equipments are:

- Photocopier

- Projector

- Printer, fax

o Traning/consultancy

This service intends to train Sao Nam An’s agents on technological skill

without commercial purpose:

- Consulting through telephone

- Training in selling skill

- Consulting of equipments usage

2.3 Focused product list

Nowadays, printers are classified according to their technology; many

technologies have been developed over years The choice of engine has a substantial

effect on what jobs a printer is suitable for, as different technologies are capable of

different levels of image or text quality, print speed, cost, and noise Todays, there

are three major types of printers that are most commonly used in homes and offices:

dot matrix, deskjet, and laser However, dot matrix is old technology with not only

low in quality and definition compared to laser and inkjects but also slow and noisy

To inkjet printer, it meets a problem in using liquid ink which is expensive on

ongoing prices and has waiting to dry ink on paper after printing

In Vietnam market, Sao Nam An considers that people prefer laser printer

than dot matrix and inkject for printing speed as well as quality Although inkject

price is cheaper than laser but it meet a problem in liquid ink while laser printer

uses solid Sao Nam An strategy is focusing on laser printer and MFC

2.4 Human resource

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Deleted: <#>Sao Nam Sông Hàn ch u trách nhi m qu n lý toàn khu v c mi n Trung¶

Mô hình t ch c c a công ty

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Figure 6: Organization chart of Sao Nam An

The chart above describes the organization structure of Sao Nam An’s

company

As described in the firgure, CEO is at the highest hierarchy in charge of total

management of Sao Nam An company There are two deputy directors who assist

CEO in controlling the company’s operation: one is the financial deputy director

and the other is the business deputy director

At the lower hierarchy level, there are different departements which have

departement managers at the head whose job is to manage their employees within

their departements Specifically, Sales departement takes care of the company’s

function in three fields including wholesale, retail and project When sales

employees obtain a contract, technical manager will set up a team to perform this

contract Accounting department is responsible for the company’s financial work

Marketing

& Sales

Receptionist and secretary

Warehouse Board managers

Accounting

Technical department

Deleted: (1)

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such as calling the company’s debtors or managing the company’s business

account Marketing department’s duty is to broadcast the company’s image into

public in order to speed up sale Finally, Human resource department tries to create

an environment for 167 individuals working with effective and coordinate manner

in order to maximize the operator productivity

The Pie chart below shows the Sao Nam An’s employee distribution by

percentage As we can see in the chart, the highest percentage of employees falls in

Sales with 31% total number of employees The number of labour forces in support

departments including technology and warehouse has occupied 28% and 10%

Administrations

Figure 7: Percentage distribution of employees

By the end of 2009, there is a merge between Sao Nam An and a subsidiary

company of Sao Nam Group making the number of employees in Sao Nam An

jumps from 95 to 167

Comment [S1]: chua xong Deleted: In the human resource

diagrams, ¶

Human resource diagrams

Sao Nam An undertakes to make distribution to its retail agents in HCM city

Nai, Tây Ninh and provinces in South Central region including Khánh Hòa, Bình

Thu n There are 21 agents in HCM city and 35 ones in neighbor provinces

2.6 Custom er Segments

a Wholesales

The distribution channels of Sao Nam An includes retail companies,

electronic supermarkets, Metro, ect In order to increase the sale volume, Sao Nam

An has provided its agents with products or services which help these agents in

attracting more and more customers like displaying equipments, signboard, training

services Customers of these agents can be organizations or individuals

The turnover of wholesale comes mostly from big retail agents such as

Metro, electronic supper markets Nguyen Kim, Phan Khang, Thien Hoa and

computer retailer Hoang Long, Sang Tao The remaining turnover comes from

others small companies in HCM and neighbound provinces

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According to Sao Nam An data in 2010, primary agents of the company

including supper market, eclectronic markets occupied about 62% printer sales

and other agents was 38% in wholesale turnover

b Project

In project part, Sao Nam An focuses on organizations such as firms, banks,

public departments, institutions, schools, universities and offices … due to specific

characteristics of products such as copier, camera systtem … that are technic and

expensive and their functions are to serve office operation Howevers, retail

customers who want to buy products and professional customer services from the

company are also welcomed and served thoughtfuly Customers can call make order

through phone or online website

In cooperated customer list of Sao Nam An, the remarkable customers of Sao

Nam An are public organizations like Government offices, Department of Justice,

Education Department together with schools system… Among of that, the biggest

customer of Sao Nam An is school system whose demand for photocopiers and

printers is very high

Looking at the chart we can see that the sales volume of Sao Nam An has

been increasing over years with the growth rate of over 40% a year This is a

signigicant development since other companies had to struggle to exist due to the

echo of the world financial crisis in 2008

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Deleted: Sao Nam An focus

Deleted: <#>Kinh doanh và tình hình tài chính c a chi nhánh à N ng _ Công ty Sao Nam Sông Hàn¶

<#>Ch c n ng¶

<#>Sao nam Sông Hàn có các ch c

n ng kinh doanh nh công ty m Soeco,

đ m trách toàn b khu v c các t nh

mi n Trung¶

<#>H th ng phân ph i¶

<#>H th ng các nhà phân ph i l c a công ty trãi dài kh p các t nh trên c

n c v i g n 400 công ty.¶

<#>Riêng c a Sao Nam Sông Hàn t i khu v c mi n Trung g m có 30 nhà phân ph i l ¶

<#>Sao Nam Sông Hàn nh p hàng t

t ng công ty và v n chuy n v kho hàng

c a Sao nam Sông Hàn¶

<#>T kho hàng c a Sao nam Sông Hàn, công ty m i phân ph i l i các đ i

lý l trong toàn mi n Trung.¶

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đ u s d ng xe chuyên ch c a công ty ¶

<#> i v i nh ng kho ng cách quá xa : khi di chuy n t chi nhánh này sang chi nhánh khác nh t HCM sang à N ng thì ch b ng tàu h a ôi khi Các chi nhánh khác nh Hà N i, à N ng nh p

th ng hàng t nhà phân ph i và l y hàng t các c ng tàu.¶

<#>Phân khúc khách hàng¶

As we can see in the table below, Sao Nam An’s commodies are broken into

four categories Moreovers, Konical, SanYo and Brother are the outstanding names

which have yielded most of the income for Sao Nam An company

Photocopier Konical is the product category which has brought hightest

turnover for Sao Nam An of about 35% total sales value each year From 2008 to

2010, this category continued its positive performance with 67.8 billion (Dong) in

sales Conceiving the importance of Konical category to the company, Sao Nam An

especially takes care of this category by providing customers who purchase Konical

products with a lot of high quality sale and after-sale services Buying photocopiers

Konical from Sao Nam An company, customers will be offered high quality

maintenance services such as cleaning service, repairing or replacing components,

ect However, in 2011, Konical’s sales trends went down due to the tough economic

situation and the government’s resolution No 11 which forced to reduce the number

of equipment purchase project

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¶

Bi u đ doanh t

Bán l 28%

D án 33%

¶

Bán s

Sanyo CCTV has the second position in the company’s portfolio with

approximately 27% of the company’s sale volume by 2007

While the sale trends of sanyo CCTV and photocopier Konical have been

going down, that of Brother has been increasing Brother products have ensured

their competitive potential with the growth rate of 75% in total sales by 2010

We know that there are still a lot of market room out there, Sao Nam An

expects to conquer those rooms by these product cetegories in future

89,814,477,426 126,741,218,344 199,010,098,600

Figure 10: Sale volumes of product categories in 2008-2010

Printer Sales distributed on type of business

The Pie chart below shows the Sao Nam An’s printers sales distribution by

type of business As we can see in the chart, the highest percentage of sales falls in

wholesale business with 52% total turnover The percentage of project and retail has

occupied 39% and 9% respectively So, Wholesale and project are two major parts

of Sao Nam An income

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a Barries to entry (high)

Barrier to entry of the distribution business is high There are 2 important

things for firms who want to enter this market to consider: capital requirement

and how to approach distribution channels

Threat of entry

(Bargaining

(Function)

(Bargaining (Ba rrier)

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While it is not difficult for many firms to penetrate the retail market, there

are few firms being able to jump through the barrier of wholesale market Retail

stores have mushroomed everywhere whereas there are only few distributors

selected carefully by manufactures We can see that distributors play a vital role in

connecting the manufactures with the consuming market

In order to be a wholesale firm, the firm needs to establish its distribution

channels If a new firm wants to use available channels which have already been

using by other distribution companies, it has to accept the lower profit because the

firm has to persuade those channels to accept its product through price breaking,

enduring the cost of advertising Besides, having good distribution channels is also

a required condition to be a distributor for office equipment manufacturers Famous

vendors like HP, Cannon, Brother, and Epso are extremely strict in looking for right

distributors in Vietnam market Moreovers, distributors who are in a slow pace of

development, weak in capital power or have few distribution channels will face the

risk of being eliminated

However, the number of companies who try to entry the wholesale market is

small and those companies are none of other than large ones who want to diversify

their business In fact, new entrance generally prefer to be retailer and expect to

reach the project sector because it requires a great deal of capital to be a distributor

Futhermore, establishing skilled technology staffs is also considered as a

high barrier for new firms These staffs have to be professional enough to create

relationships with customers as well as maintaining these relationships as long as

possible

b Substitue products (high)

There is high substitute in this industry

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t ng đ i l n.¶

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đ nh p hàng t nhà s n xu t, v n phòng tr ng h p khách hàng tr

ch m, v n đ ho t đ ng ….và bù l trong các tr ng h p sai xót, h h ng máy móc ho c l lãi do vi c thi u kinh nghi m gây ra ây là m t ngành thu c

l nh v c k thu t, tuy n d ng nhân viên, chi phí đào t o c ng là m t chi phí không nh cho m t công ty m i nh p ngành.¶

<#>K t đ n là xây d ng m t đ i ng nhân viên k thu t lành ngh trong vi c

b o hành, l p ráp s a ch a c ng nh chuy n giao công ngh Ngoài ra, đ i

ng nhân viên t nhân viên kinh doanh,

đ n ch m sóc khách hàng, đ i ng t

v n ph i có v n ki n th c t i thi u v

k thu t đ đàm phán v i khách hàng.¶

<#>H n n a, vi c đ a m t công ty m i thành đi vào gu ng máy ho t đ ng hi u

qu và thông su t c ng t t r t nhi u

th i gian c a nhà qu n lý.¶

S n ph m thay th

There is a wide variety of printers in market The best selling printer in Viet

Nam market is Cannon, the second one is HP and next to that are Xeros, Sam Sung,

Dell, Epson … The market share of Brother in printer market is quite small and

Brother’s low popularity in Vietnam market is not relative to its high quality

Another factor which affects profit coming from Brother products is the

price of its ink cartridges Brother’s ink catridgets are usually more expensive than

consumers might expect To save money, many people use compatible ink

cartridges from a vendor other than the printer manufacturer The high cost of

cartridges has also provided an incentive for counterfeiters to supply cartridges

falsely claiming to be made by the original manufacturer Another alternative

involves modifications of an original cartridge allowing use of continuous ink

systems with external ink tanks Others use aftermarket inks, refilling their own ink

cartridges using a kit that includes bulk ink

Brother Cartridges lack any chip and consist of merely a sack of ink, they

can be readily refilled Canon, Dell, HP, and Lexmark cartridges generally are not

difficult to refill, though some Lexmark cartridges employ a built-in counter chip

that can't be reset; Epson cartridges also have a built-in counter chip, however it is

possible to purchase a chip resetter Moreover, Brother as well as other major

printer manufacturers − Hewlett Packard, Lexmark, Dell, Canon, Epson − use a

"razor and blades" business model, often breaking even or losing money selling

printers while expecting to make a profit by selling cartridges over the life of the

printer Since much of the printer manufacturers' profits are from ink and toner

cartridge sales, some of these companies like HP, Lexmark have taken various

actions against aftermarket cartridges

c Bargaining power of buyers (high)

Buyers of Sao Nam An Company contains 3 groups: agencies, retail

customers and project’s customers

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ty kinh doanh c ng nh ng i tiêu dùng

nh l hi n nay.¶

Các s n ph m nh máy in, máy photocopy

có th nói là các phát minh v t b c c a

th k 20 giúp con ng i ti t ki m chi phí,

th i gian, nhân l c trong làm vi c so v i các th k tr c kh i doanh nghi p,

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Agencies Firstly, the relationship between Sao Nam An and its agencies is

that of vendor and vendee Therefore, amount of order an agency makes determines

order the stronger their bargaining power Now, retail companies tend to order

goods from many different sources and, of course, they will make most of their

order to the company which provides them the most benefit As the result, their

distributor Some large retail vendee like Nguyen Kim, Metro, Phong Vu… raise

high pressure for Sao Nam An with requirement of deferred payments and

long-term debt On the orther hand, agencies have strength to directly contact with

customer and consult for them which brand name they should buy If there is not a

close relationship between distributor and agencies, the business situation will

disadvantage for distributor and certainly, agencies’ profit affected directly

However, based on financial situation of Sao Nam An, Sao Nam An is in advantage

with their distribution network

Retail customer: Today, buying a printer is not much difficulty and

expensives, like it often in the past That’s partly because of the vast of abundance

technology, manufactures and model to choose from Although buyers don’t have

an opportunity to bargain, manufactures are looking for new technologies to

innovate their products so that they can reduce cost price The serious price war

between manufactures gives buyers more benefits Therefore to make a right

decision, buyers have to consider carefully the initial cost of purchasing and

ongoing costs and other factors like speed, quality and ink technology in order to

make a right decision To be honestly, in the past Vietnamese customers have little

knowledge about technology and outgoing costs after purchasing and the

prerequisite condition for their choice is product brandname and price However

their awareness gradually increases day to day, while manufactures have to compete

to each other stronger

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Project: Primary customer of Sao Nam An is organizations, institutions,

companies…and specially education system that has high demand in photocopy,

printer, projecter products The purchasing police of the kind of customers is often a

public auction which is a good choice for these companies to select good partner in

competitive market Purchaser can gain benefits from selecting high configuration

and cheap prices as well as good quality service of the distributors Consuming, this

customer group has deep knowledge about technology and functions of goods that

have high power in bargaining with Sao Nam An

d Bargaining power of suppliers (low)

A strong manufacturer/distributor working relationship has traditionally been

something that both parties strived to achieve Through improving the working

relationship between manafactures and distributors, parties can increasd sales

volume, lower operationg cost and higher profit margins which are just a few of

advantages can be gain Therefore, manufacture-distributor connection should be

mutual relationship

Manufacture – Brother is international company with high reputation on over

the world while Sao Nam An is a domestic company with small tall of stature

compared to its supplier However, Sao Nam An has much experiences in office

equipment business in VietNam and widen distribution network So, bargaining

power of Brother is low when they want to extend their business in VietNam

e Rivalry among existing competitors (high)

Facing numerous competitors

Nowadays, famous office equipment companies such as Canon, Hp, Epson,

Xeros, Brother, SamSung, Dell and Konical …are presented in VietNam Each firm

applies its private technology and produces diversify product categories in quality

and model to server various customer segments Sao Nam An is one of two main

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distributors of Brother in VietNam In printer sector, it can say that almost

distributors of other hardcopy peripheral vendors in Vietnam are Sao Nam’s

competitors Even Sao Nam An agencies are also its competitors when fight for the right to provide equipments for an institution in bidding commercial affairs The rivalry is extremely highly in this market The first priorprity and dangerous

competitor of Sao Nam An is Cannon presented in VietNam at the beginning of

1980 with 2 centers in HCM and HaNoi, 2 major distributors and more than 300 retail agencies in all provinces of VietNam Second, HP-the learder on over the world of printer lines and hold the number 2 in Vietnam market was entried in 1995 with more than 250 retail distributors and 2 warranty centers all the country

Besides, other vendors like Xeros, SamSung, Dell, Konical … are simultaneously investing in manufacture and distribution channels extension to increase their market share

The disadvantages of SaoNam in distribution Brother Products is increased directly proportional to the widespread population of other high reputation like HP, Cannon through different channels Their bandnames are not only popular in printer sectors but also in other electronic products For example, Cannon is high reputation

in digital camera; HP and Dell are famous brandnames with PDA, servers, and laptop; SamSung with electric equipments such as TV, fridge, washing machines, microwave oven and mobiles Besides, HP, Cannon and other competitors have power in capital and experiences

The office equipment industry growth rate

The office equipment industry has a high growth rate of 10 % per year,

boosting many companies to try to entry this industry In the office equipment distribution market, many big companies with long-term strategy already take the right of being official distributors for worldwide renowned office equipment

manufactures In the field of retail and project, many supermarkets, technology

product selling companies gradually determine their positions in the market

Besides, companies whose business is selling technology products and

telephones…are really dangerous potential competitors if they ever want to

diversify their businesses and jump into the office equipment distribution market as

a indispensable trend following the criterion “office, electron, telecommunication”

These potential competitors already have wide distribution network and a lot of

experience in distribution They locates mostly in big cities like HCM city, Danang,

Hanoi

Currently, in Vietnam distribution market, some distributors also carry out

retail This causes harm to retail agents’ business In the project business line, retail

companies a very big advantage which distributors don’t have, choosing many

products with different configurations and prices to join render This element

increases the competitive level within distributors

Lack of distinction and conversion cost Office equipments of different

manufactures often share same functions and price so it doesn’t cause any trouble

for customer when they change from this product to another

4 Competitor analysis

Identifying the right competitors is an important mission of company who

wants to be at top of the market Main competitors of Brother are these leading

brand names includes HP, Canon, Fuji Xeros, Dell, Samsung… All these

distributors have a lot of experience and wide distribution channel in Vietnam This

thing makes it difficult for Sao Nam An to do competitor analysis due to the limit in

ability and the large number of competitors in Vietnam Hence, in this research,

researcher will focus only on major competitors of Brother: HP, Canon, Fuji

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equipment companies such as Canon, Hp, Epson, Xeros, Brother, SamSung, Dell and Konical …are presented in VietNam Each firm applies its private technology and produces diversify product categories in quality and model to server various customer segments Sao Nam An is one of two main distributors of Brother in VietNam In printer sector, it can say that almost distributors of other hardcopy peripheral vendors in Vietnam are Sao Nam’s competitors Even Sao Nam An agencies are also its competitors when fight for the right to provide equipments for an institution in bidding commercial affairs The rivalry is extremely highly in this market The first priorprity and dangerous competitor of Sao Nam An is Cannon presented in VietNam at the beginning of 1980 with 2 centers in HCM and HaNoi, 2 major distributors and more than 300 retail agencies in all provinces of VietNam Second, HP-the learder on over the world of printer lines and hold the number 2 in Vietnam market was entried

in 1995 with more than 250 retail distributors and 2 warranty centers all the country Besides, other vendors like Xeros, SamSung, Dell, Konical … are simultaneously investing in manufacture and distribution channels extension to increase their market share ¶ The disadvantages of SaoNam in distribution Brother Products is increased directly proportional to the widespread population of other high reputation like

HP, Cannon through different channels Their bandnames are not only popular in printer sectors but also in other electronic products For example, Cannon is high reputation in digital camera; HP and Dell are famous brandnames with PDA, servers, and laptop; SamSung with electric equipments such as TV, fridge, washing machines, microwave oven and mobiles Besides, HP, Cannon and other competitors have power in capital and experiences ¶

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v n phòng t ng tr ng nhanh v i t c đ 10% m t n m là m t y u t h p d n thu hút các doanh nghi p gia nh p ngành N u

ch xét v m ng phân ph i s thì trên th

tr ng th ph n đã đ c xác đ nh b i m t [5]

The data presented in below table list competitors of Sao Nam An They are very strong competitors which are several times more powerful than Sao Nam An in capital as well as distribution channels

Element

s

Company

Name

Printer Brand Cannon Hp, SamSung

HP, SamSung, Dell

Projector, Camera

Computer, monitor, camera, camcorder, projector, photocopy and printer

Outsource software Telecom and IT device

Printer, projector

Distribution across the nation: 1

offices, 7 retail stores ,

over 500 agencies and

6000 loyal customers

1 offices and 2 branches More than 1200 agencies Business Wholesale and retail,

Support agencies in promotion activities, customer services and