Gries GAMBA01.C0510- GROUP 6 — STRATEGIC MANAGEMENT Andrews Q University = GRIGGS INTERNATIONAL MASTER OF BUSINESS ADMINISTRATION TRAINING PROGRAM Global Advanced Master of Business
Trang 1Gries) GAMBA01.C0510- GROUP 6 — STRATEGIC MANAGEMENT
Andrews Q University = GRIGGS)
INTERNATIONAL MASTER OF BUSINESS
ADMINISTRATION TRAINING PROGRAM
Global Advanced Master of Business Administration
CAPSTONE PROJECT REPORT
KINH DO BAKERY CHAIN STORES
4 PHAM NGUYẼN PHƯƠNG THÚY
Trang 2CONG HOA XÃ HỘI CHỦ NGHĨA VIỆT NAM
Hiện đang công tác tại Công Ty CPTP Kinh Đô Sài Gòn
Là đại diện cho nhóm các thành viên có tên sau đây :
I- Thái Viết Phương
2- Phạm Thị Bắc
3- Nguyễn Minh Hoàng
4- Phạm Nguyễn Phương Thúy
Nhóm chúng tôi hiện đang theo học khóa đào tạo Thạc Sỹ Quản Trị Kinh Doanh Quôc
Tế tại trường Đại Học Griggs - Mỹ, và đang trong quá trình làm bài tập lớn để tốt
nghiệp khóa học
Nhóm chúng tôi chọn đề tài :
“CHIEN LUQC PHAT TRIEN CHUOI CUA HANG KINH DO BAKERY TRONG GIAI DOAN TU NAY DEN 2020 TAI CONG TY CO PHAN THUC
PHAM KINH DO SAI GON”
Trong qua trinh thyc hién dé tai, chúng tôi có dùng một số dữ liệu của Công Ty CPTP Kinh Đô Sài Gòn
Vì vậy, thay mặt nhóm tôi làm đơn này xin phép Tổng Giam Đốc cho phép chúng tôi sử dụng sô liệu của Công Ty để hoàn thành đề tài
Trong khi chờ đợi sự chấp thuận của Công Ty, thay mặt nhóm tôi xin gửi đến Tổng Giam Đốc Công Ty CPTP Kinh Đô Sài Gòn lời cảm ơn sâu sắc nhất !
NGƯỜI LÀM ĐƠN
Pham Shi Bie
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CONCLUSION
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AC TTIVETIES ANALASYSTN KINH ĐO SAIGON COMPANNY 20
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CHAPTER 3 RINT DO BAKERY CHAIN SEORES DEVELOPMENT
STRATEGIES FROM NOW TO 2020 OF KINH DO SAIGON COMPANY 47
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INTRODUCTION
| Topic essence
In recent years our country has been showing innovation, openness integration international exchanges especially through modern media the value of globalization has a strong impact on Vietnamese lifestyle to create positive changes
in lifestyle Way of consumption in Vietnam ts very different now, it 1s elevated to
new and higher level with very diverse tastes and vision of industrial society Only ina Very short time the Vietnamese consumer lifestyle changes significantly from the consumption of a poor agricultural country to a consumer lifestyle of the industrial society Farmer lifestyle is now replaced by more urgen lifetyle
Busy and urgen modern lite makes people have less time tor breakfast And a quick and convinient§ solution has been introduced: usage of instant food Nowaday, business model of coffee - cakes is not new to Saigon because some
brands like Givral, Brodard which have opened since long before 1975 But now, this model has been upgraded to a new form and it created new eating and drinking
style: customers do not only come to eat but also to have fun, to meet each other
In early 2007, Tous Les Jours - of CJ Vietnam Cakes Company invested by Korean, started a new trend of bakery & café (coffee and pastry shop) and appeared around
Ho Chi Minh City In July 2009, Kinh Do Saigon (member of Kinh Do Group) launched the first K-Do bakery & cafe
Cake and coffee shop is an inevitable development trend of the current culinary business Integrated business model of coffee and cake is the new
development of the fresh bakery shop and also new consumer trend
Thus the development of the Kinh Do Bakery chain stores marks a new development in the company's business operations: particularly in responding to
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consumer trends ts the introduction of a new model tor fresh bread traditionally associated with drinking (Bakery & Cafe)
The company should have an appropriate strategy for development So our group choose this topic for analyzing with a desire to contribute to the strategy development Kinh Do Bakery chain stores in the period from now until 2020, with the expectation to see a Vietnamese brand of fresh bread industry thrive, compete with other countries in the region and the world in the future
2 Topic researching objects and scope:
Researching object of this topic is Kinh Do Saigon Food Company The scope of this project is to research issues related to the retail industry in
general and chain stores Kinh Do Bakery with its development from now to
Đ
2020
3 Research methodology:
We have used the following methods to implement the project: description,
data collection, analysis and synthesis for the production and business
activities of Kinh Do Saigon Food Corporation
4 The scientific and practical significance of the topic
Scientific Significance: strategic planning is an effective approach for
enterprises to have an efficient use of resources, and determine the correct
direction Therefore the topic will present an approach to strategic planning and business development applied to the specific conditions of Kinh Do
Saigon
The practical significance: the topic has been studied basing on the state of the Kinh Do Saigon the research methods to provide possible solutions in the hope of contributing to the acceleration of the expansion Kinh Do bakery chain stores in particularly and Vietnamese brands retailing sector in general
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5 The thesis structure:
Besides the introduction conclusion and appendices structured thesis consists of three chapters
Chapter |: Overview of strategic management theory and practical
requirements of the topic
Chapter 2: Analysis of the state of production and business activities in the Kinh Do Saigon Food Corporation
Chapter 3° Strategic Planning Development for Kinh Do Bakery chain and
the solution made from now to 2020
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CHAPTER I PHE OVERVIEW OF STRATEGIC MANAGEMENT THEORY AND PRACTICAL REQUIREMENTS OF THE TOPIC
1.1 Overview of strategic management theory
1.1.1 Definition
There are many different definition of strategy
According to Alfred Chandler Harvard University: "Business strategy includes the determination of basic long-term goals of the business, at the same time
choose the way or mode of action and the allocation of resources to achieve the
goal.”
According pred R.David: "Strategy is the means to achieve long-term goals."
By Michael E Porter: "Development of business strategy is to develop competitive
position through a competitive advantage”
The definition of strategy is different in wording due to be drawn from different
socio-economic practices, but the strategy include the following basic contents:
- The determination of the short-term and long-term goals of the business
- The introduction and implementation options
- The implementation and resources allocation to accomplish objectives
effectively
The importance of the planning and implementation of the business strategy to be
expressed through the following:
- Strategy helps the business define clearly business purpose and direction to
avoid the error in the orientation for the future
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- Strategy is the basis for determining the targets specific business activities and performance Measurement
- Strategy helps businesses efficiently allocate the resources improve the internal situation and monitoring the process of achieving the objectives
- Strategy plays an important role in the survival and development of busines, helps them to face to the rapidly changing environment
/ 1.2 planning process (strategic management)
Step L: Define the vision, mission and goals of the business
- Define the vision: the first step in the strategic planning and very important for managers to set long-term goals
- Identify mission: is an important basis for the choice of objectives and strategies
of business development
- Define the goal: The goal 1s to perform its mission and vision
Step 2: Analyze the environment
Analysis of the external environment:
(1) Analysis of the macro environment
Analysis of the external environment (PEST) helps us identify the business opportunities and risks to form the appropriate strategy Analysis of the
external environment through factors:
- Economic Environment: Gross domestic product, per capita income, monetary policy national economic integration
- Government Environment, political and legal: Enterprise must get a good hold of external political trends and policies of the Party and the State which affect the development of the business
- Engineering and technology: A growing number of nascent technologies create Opportunities and risks for businesses New industry helps produce products with lower cost more competitive The new technology also shortens the lite cycle of the product
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- The socio-cultural environment) consumer characteristics lifestyle or culture of each locality will affect demand and tastes of consumers
Population poptiation size population growui rate population siructure Impact to the businesses
(2) Analysis of the micro-environment:
According to Michael Porter any business must be affected by competitive pressures( forces), [These competitive pressures include: suppliers customers potential competitors, substitute products and rivalry within the industry
suppliers within the industry
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- Competitive pressures of suppliers: It is the number and scale of suppliers Number of suppliers will decide competitive pressure their bargaining power for dusty business Hi he iarket only Nas a few large-scale supptlers it will create highly competitive pressures affecting the entire industry's production and business
acuivilles
- Competitive pressure from target customers: creates direct Impact on the entire industry's production and business activities Customers are classified into two groups: customers and distributors Both groups put pressure on businesses in terms
of price product quality service and they may control competition in the sector
through the purchase decision
- Competitive pressure from potential competitors: the businesses are not currently available in the industry but they may affect the industry in the future To protect competitive position, existing businesses should increase barriers to the sector through measures such as diversification of products, the advantage of scale
Or if potential competitors must have large initial investment costs to join in the industry
- Competitive pressure from substitute products: A substitute product is a product that appears to be different, but can satisfy the same need as products in the industry
Substitute products limit the profit potential and threaten the market share of the
businesses
- Rivalry between competitors within the industry: This frequently causes constant threat affecting directly to business enterprises in the same industry The more a pressure of competition between businesses increases, the more It threats to
their position and existence
Analysis of internal enviroment
Internal Environment includes factors that can control as business management production finance foreign relations human resources, information systems help
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businesses identify strengths weaknesses in order to offer a suitable strategy Step 3: Identify long-term goals and business development strategy Identily the main objectives is the process of judyinent combining wiih product demand forecasts and predict sales of the business In addition, there 1s another factor that should be considered carefully is the product’s life cycle Reasonable goal building will become the motivation a measure of the strategy implementation
process
Step 4: Identify action plan and solutions implementation
This is the process of setting up a mechanism tor making allocation plan of the resources in order to implement the direction of the key strategic solutions selected Step 5: Evaluation and adjustment
Due to rapid changes in environmental factors and forecasts for the future 1s hard to
achieve absolute accuracy in the implementation process, it requires businesses to
continuously examine, evaluate and adjust
1.1.3 Classification / strategic level
1.1.3.1 Corporate level strategy:
- Related to the overall objectives of the business and scale to meet the expectations
of shareholders
- The long-term goal, the development orientation of the organization
/.1.3.1.2 Intensive strategic group:
* Market Entry Strategy) Increase market share for the product or services available in the market by the marketing efforts: Increase the number of sales personnel, advertising costs Increase product promotions widespread or advertising
efforts
This strategy 1s used
+ Current market 1s not saturated
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+ High consumption speed
+ Market share of competitors declines the industry sales increase
+ Not high marketing costs
+ The high corporate saving to get a competitive advantage
** Market Development Strategy is offering products or services In new markets
The more favorable the development enviroment in the market is the higher demand in new market is it is difficult to maintain competitive position in
traditional markets
This strategy 1s used:
+ The new channel ts ready reliable, low cost and good quality
+ The new market ts not saturated
+ Obtain necessary capital and human resources to manage expanded operations + Enterprises are able to to expand production capacity, expand their business
*** Product Development Strategy: How to increase sales by improving or
modifying existing products or services; it requires large expenditures for research
and development
This strategy is used:
+ A number of enterprise products are in the mature stage of the product life cycle + The advancement of technology
+ The competitors offer better-quality products at competitive prices
+ Fast-growth enterprises
+ Enterprise has the strong ability to research and product development
1.1.3.2 Business Unit strategies
- With regard to how a successful business can compete on a market It 1s the overall commitment and action to help businesses gain a competitive advantage by exploiting their core competencies in specific product
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- Figure out how firms in different industries compete to each other identify the competition for the SBU (strategic business unit is the "strategic business units") and how to allocate the resources effectively
Strategic business unit relates to
+ The location of the business activities to compete
+ Predicting demand changes the scientific and technological progress and adjust strategies to adapt and respond to these changes
+ Impact and change the nature of competition through strategic activities such as vertical integration or through political activities
1.1.3.3 Functional Unit strategies
- In relation to each functional department within the organization (R & D, production, marketing finance .) are held as to how to implement the strategic direction at the corporate level and each SBU in business successfully
- Details of the objectives and methods of short-term actions are researched by the functional department to achieve short-term goals of the SBU and long-term goals
of the organization
- There are two problems need to be solved:
+ Meet the functional domains for the operational environment
+ Coordinate the policy functions together
1.2 Supporting tools for identifying strategic options
We only selectively use some tools that we think they will be useful for developing strategic planning for Kinh Do Bakery stores
1.2.1 External factor evaluation matrix (EFE)
This is a tool that allows assessment of the impact of the external environment mainly to business) EFE matrix is implemented in five steps:
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Step I: Make a list of the factors that play a decisive role for the success of the enterprise as identified in the macro environmental assessment process This list
av
consisis of 10 to 20 clemenis including the opportunities and threats aliecting
business and industry
Step 2: Classification of weight from 0.0 (not important) to 1.0 (very important) for each factor Total taxonomic levels must be equal to 1.0
Step 3: Rating from | to 4 for each of the factors to show how the current strategy
of the business response to these factors Where: 4 Is a superior, 3 1s above average
2 below average and | 1s poor This rating 1s based on the strategic management of
an enterprise
Step 4 Multiply the weight of each variable to its rating (= steps 2 x 3) to
determine the weighted score
Step 5 Add the number of weighted score for each factor to determine the total weighted score Regardless of the number of opportunities and threats in the matrix, the highest weighted score that a company can have is 4.0 highest, 1.0 lowest and
2.5 average Total score which 1s greater than 2.5 will indicate that companies take advantage of opportunities and minimize threats from environment above the
1.2.2 Internal factor evaluation matrix (IFE)
Step |) Make a list of key success factors as identified in the evaluation process of
the internal factors This list consists of 10 to 20 elements including the strengths
and weaknesses
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Step 2) Classification of weight trom 0.0 (not important) to 1.0 (very important) for each element Total importance score level must be 1.0
Step 3° Rating trom | to 4 for each of the factor including: | represents the major weakness 2 1s the minor weakness 3 1s the minor strength, and 4 1s the major strength
Step 4 Multiply the weight of each factor with its rating (= steps 2 x 3) to
determine the weighted score
Step 5: Add the number of weighted score of each factor to determine the total
weighted score Regardless of how many factors [FE matrix may have the highest total score that each business can get 1s 4.0 highest, 1.0 lowest and 2.5 average Total score which is greater than 2.5 will indicate the internal strengths of the business or, conversely, smaller than 2.5
1.2.3 Competitive profile Matrix (CPM)
Competitive profile matrix identifies the main competitors with specific
advantages and disadvantages This matrix is the extension of EFE and IFE in evaluating success factors Also in the competitve profile matrix, competitors are also researched and evaluated basing in weighted score The total score of the competitors 1s compared to the studied company The comparison gives us much important strategic information
How to build a competitive profile matrix is similar to how to build IFE and EFE
1.2.4 SWOT matrix:
A strengths - weaknesses opportunities - threats (SWOT) is important combinated tools that can help managers develop four types of strategies The purpose of the SWOT matrix is to create feasible strategies that the enterprise can choose not to decide what the best strategy is Therefore amongs the development strategies in the SWOT matrix only some of them Is selected
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lo build the SWOT matrix we first need to analyze the strengths weaknesses opportunities and threats in the appropriate boxes Then we combine these elements
to create sifdiegies afid Conduct te comparauive deseripuion systematically each pairs of elements
- Strengths - opportunities (SO): This strategy uses strengths within the enterprise
to take advantage of external opportunities
- Weaknesses - opportunities (WO) WO strategies aim at improving internal weaknesses by taking advantage of opportunities from the external environment
- Strengths - threats (ST) The strategic use of the strengths of the business to avoid
or reduce the impact of external threats
- Weakness-threats (WT): a defense strategy aims at reducing internal weaknesses
and avoids threats from the external environment
Advantages: Give specitic strategies combining from the strengths, weaknesses,
opportunities and threats
Limitations: Helping out the feasible strategy, not to make a best choice
1.2.5 SPACE matrix:
SPACE matrix shows that a business should choose the strategy: agrresive,
conservative, defensive and competitive The axises of the matrix have the
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Step 2: Set the value +! (Worst) to +6 (best) for each element of the FS and IS specify the value -1 (best) to 6 (worst) for each element the ES and CA
Step 3: Calculate the average for FS by summing the values assigned to the elements, and then divided by the number of selected elements are shown in FS Same way with the IS ES and CA
Step 4: Average score of FS, IS ES and CA on the appropriate axis of the SPACE
matrix
Step 5: Add the scores on the X axis and marked the results of the X axis, similar to the Y axis and then determine the intersection of two new point on XY axis Step 6: Draw the vector with the direction from the origin of new SPACE through the intersection matrix This vector will show type of business strategy: agrresive, conservative, defensive, and competitve
The example of the image of the strategy:
conservative FS
conservative FS agrresive agrressive
Strong finances resource Company and
gain more competitive advantage in an
symbolic and stable industry
Strong finances resource and salient company
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The company has financial strength in a stable
industry but ShOWS no growth, the company has
no major competitive advantage
na stable industry but Shows no
zrowth, the company has no major
sompetitive advantage
Competitive model
the company is pretty good in
Comanies have a competitive
competition in a volatile industry advaitage in a high growth
indutry
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The competitive position of the Companies are having financial
company is very low in negative difficulties in a very unstable
and stable growth industry
1.2.6: Quantitative Strategic Planning Matrix (QSPM)
QSPM is a tool that allows the strategists to evaluate objectively possible strategies,
firstly based on the internal and external key success factors which have been
identified As well as other strategic tools:
Step L: List the opportunities / external threats and important internal weaknesses /
strengths
Step 2: Classify each internal and external critical success factors
Step 3: research the matrix and identify alternative strategies can be considered for implementation
Step 4 Determine the attractiveness scores
Step 5: Calculate the attractiveness scores
Step 6 Add up the attractiveness scores
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Chapter 2
THE REAL SITUATION OF BUSINESS PRODUCTION
ACTIVITIES ANALASYS IN KINH DO SAIGON COMPANY 2.1 Introduction about Kinh Do Saigon
2.1.1 Establishment and development
2.1.1.1 Summary of Kinh Do Saigon Food Joint Stock Company
Company Name: Kinh Do Saigon Food Joint Stock company
English trading name: Kinh Do SAIGON CORPORATION
Name: Kinh Do Bakery
Ben Thanh Ward, District 1, Ho Chi Minh City
Phone: (08) 3 8270 838 - Fax: (08) 3 8270 839
Email: info£Kinh Do vn Website: www Kinh Do vn
Capital: 20.000.000.0000 VND
2.1.1.2 The establishment and development process
Kinh Do Saigon is a member of Kinh Do Corporation, specialized in
manufacturing and trading confectionery sector
Kinh Do Corporation was formerly known as Kinh Do food processing
limited liability Company which was established by decision 216 GB on 15 February 1993 - UB dated 27 February 1993 of the Ho Chi Minh City people’s committee Chairmanand business license number 048307 by the economic arbitration Ho Chi Minh City issued on 03 February, 1993 Kinh Do Corporation Started as a small workshop area of 600 m2 at Phu Lam No 477/8 FI - District 6 -
Ho HCM With initial capital investment of 1.4 billion and 70 staff directly
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involved in production At that ime the company specialized in manufacturing and trading of snack
The period 1993 - 1994 was a milestone for the growth and ongoing development of the company through the production and trading snack After the researching process of market demand the company board of directors decided to increase its charter capital to 14 billton USD and import snack production line with Japanese technology worth over 750.000 USD
In 1995 - 1996 companies invested money on building food processing plants in 6/134 Highway 13 - Hiep Binh Phuoe - Thu Duc - Ho Chi Minh City with
an area of 14.000m2 Also Kinh Do first breakthrough by investing cookies production line with technology and modern equipment of Denmark which cost $ 5
million
In 1997, the company used the new equipment imported from the advanced countries to improve product quality and diversify products for the domestic market The company's products were qualified to export and they exported to the countries such as Taiwan Australia, USA, and Canada (production lines and equipment to produce bread, cake with total investment worth 1.2 million USD) Capital increases to 31 billion
In 1998, Chocolate candy production line was put into use with a total investment of about $ 800,000
In 1999, the company continued to increase the legal capital of VND 40
billion with outstanding event was the establishment of trade centers Savico - Kinh
Do in District 1, which was the implemented land of investing projects influenced
by the economic crisis in Asia - Pacific Board of Directors of the company has invested to build a commercial center Kinh Do Savico with Kinh Do Bakery shop
In early 1999 the company applied a quality management system standard ISO
9002 In manufacturing and trading On 01/05/2001 BVQI - United Kingdom
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officially certified quality management system of the Company in accordance with International standard system TSƠ 9002
Kinh Do Bakery was born trom here located on Nguyen Hue, District 1 was the store that sold fresh cakes bread and confectionery product line by Kinh production
With the success of the first store the company continued to expand the system of Kinh Do Bakery and after 8 months from the date of its first store in
operation, the system stores Kinh Do Bakery reached 6 stores with average monthly sales of 3 billion
Along with the development of the system of Kinh Do Bakery, Kinh Do Corporation has established factory specialized in producing fresh bread to serve for
the system of Kinh Do Bakery
Success after success In the expansion of chain stores Kinh Do Bakery Up to the year 2004, Kinh Do Bakery stores reached to 19 stores
To meet the growth and customer demand, the Company invested in
technology produce fresh bread, bread from European countries such as France, Germany and Asian countries such as Taiwan, Japan and established factory specializing in the production of fresh bread to meet customer demand for the system Kinh Do Bakery
Faced with rapid growth, in March,2004 Kinh Do Saigon Food Joint Stock Company was established with functions of producing fresh bakery products and
advanced management of system Kinh Do Bakery
Kinh Do Saigon Food Joint Stock Company was established here and built the
new brand identity
Ss Kinh Do Bakery
lai [se JegecMM, emdaniehes Umber ‘Tums - (lmmgieng: jit
head Office: 447/18 Hung Vuong Street Ward 12, District 6
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With the resounding success of the Kinh Do Bakery business model, a lot of partners would love to participate in the cooperation to own Kinh Do Bakery store
With the existence of the fast food industry, there were changes in
consuming trends, consumers’ habits
The entering of foreign brands to Vietnam market
The transformation and development of the domestic brands
Kinh Do Bakery has introduced new business models, including fresh bread, drinks, fast food and the brand new model K-Do Bakery & Café In addition to the traditional product line the new product line was introduced to meet new consuming trends
In 2010 Kinh Do Corporation officially moved its headquarters to the centre
of District 1, Ho Chi Minh City (01/2010) and at the same time fresh bread factory
of Kinh Do Saigon moved to TanTao industrial park in order to meet the needs of rapid development This event marked the turning point: Kinh Do reached new
level
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2.1.1.3 Achievements From the opening of the first Kinh Do Bakery store up to now Bakery have grown ito d Chain with SU stores til slidiegie DuSiMess cations OF ie iwo cries Chi Minh
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2.1.3 Business field
Through the formation and development presentation Kinh Do Saigon Food Joint Stock Company includes a factory and a chain of retail stores specializing in food fresh bread fast food drinks with over SO stores located in the bustling business in Ho Chi Minh City and Hanot area
Kinh Do Saigon Food Joint Stock Company operates with a mission: Become the supplier of diversified -convenient-nutritious product lines tor daily meals with guaranteed quality and reasonable price
2.2 Analysis of the real situation of the production and business activities
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2.2.1.1 Concept of Kinh Do Bakery stores
Kinh Do Bakery business concept Is always focusing on the consistency of the store and gets full satisfaction from customers by:
— Quality: high quality, great taste and safety
4 Service: greeting, smiling agility respect, prestige, friendly
— Cleanliness: clean neat and tidy
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2.2.1.2 Organizational Chart at a store
DELIVERER (2) SERVER
- Total employees at one store
Minimum = 23 workers => 11 -> 12 employees / shift
Maximum = 29 workers => 14 -> 15 employees / shift
- Depending on the scale of store (big — small), reasonable staffing for each working position
- Createing work schedule for each position weekly/monthly
- Work regulation for each employee: 6days/week Shours/shift while ensuring work for all positions
- Stores are open from 6 am — 22: pm daily including Sundays and holidays
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- Manager / Vice- Manager / Assistant are not alowed to register with same one day off and the same day of which the manager has meeting with the leadership at
headquai lers
2 2.1.3 - Functions - store duties
a / Functions:
- A place to promote the brand image of the company to customers
- A place to introduce the Group's products to customers
- Implement strategic business goals of the company: sales growth over the years
ensuring margins keeps old customers and each year gets more new customers
b / Tasks:
- Carry out the customer services by introducing new products, marketing programs
to make them satisfied and use more products and services according to standard of the company to achieve sales targets
- Keep the store's image: ensuring quality standards in accordance with the
company's activities: the image outside and inside the store The store 1s always
clean and safe according to the standards prescribed by the company
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2.2.2.2 Kinh Do Bakery Production situation evaluation
From 2008 to date, there were economic and political changes in all over world that
had great Impact on many countries including Vietnam
Vietnamese businesses also were impacted by world crisis
Inflation increases, price index increases, escalating prices and pricing in 201 | made consumers consider their choice more carefully
This influences on business production performance
For the retail sector, space is very important Rental continues to increase, this
greatly impacts on operation result of the Company
By the effort from leaders employees, the company tried best to maintain the performance effectiveness
2.2.2.3 Financial indicators
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Total debt to equity ratio 166% 179% 178%
Profit margin
Return on equity (ROE) 43% 33% 44%
Through the summary of financial indicators, we have evaluation as follows:
- For the food retail sector, the quality is top concern, so the inventory day ranges from 17 to 25 days is reasonable There are fresh ingredients to make the "Just in
time" inventory, daily use goods
- To do this, we should have enough strong suppliers to meet the needs of producing
fresh food for the company
- Fixed assets turnover ratio: does not change much over the years, suggesting that company has efficient use of property
- The total debt to total assets ratio (ROA) is above 50%, indicating that properties attained from debt and capital approriation from suppliers This suggests that
company is quite good using financial leverage as well as retain the ability of self- finance
- The total debt to equity ratio (ROE): not fluctuate much but at a very high level For the food retail sector the owner's equity 1s not much, the company can still
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operate effectively on debts demonstrates that the company ensures efficient operation profit margin of 5°
- Im sum up, for the food retail industry inventory turnover Is very fast creating huge daily cash flow without having to use large capital this shows the
effectiveness in investing in the industry Illustrate for the effectiveness 1s ROE greater than 30%, double comparing to savings
2.3 Business environment analysis
2.3.1 External environment analysis
2.3.1.1 Macro environment analysis
The political environment, policy and law analysis
- Over the past decade, the political situation in Viet Nam is highly stable At the
same time, people's income increased substantially, making social demands also increase This has a positive impact in creating and implementing strategies of enterprises in Vietnam in general and Kinh Do Saigon in particular
- Besides economic integration policies, the completion of the Vietnamese Party
and State laws in recent years has accelerated the process of economic reform in
Vietnam
- On the other hand, there is more and more foreign and domestic competitors appear This is a big challenge for Vietnamese businesses, requires businesses to improve competitiveness and operate more efficiently to survive and develop
- The confectionery producers use a lot of labor and domestic agricultural products such as sugar, eggs, milk therefore they receive many preferential policies such
as land tax, corporate income tax, import duty machinery .trom the Government
- In recent years, Kinh Do Saigon always interested in food safety and consumer
protection It is also a long-term strategy of Kinh Do Saigon Kinh Do brand 1s now
a strong brand, so every Kinh Do Bakery store also must inherit the strength of this
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brand, so this impacts considerably on the development of business strategy of the company in the future
5 NOKIA Finland Telecommunication 65,1
5 SONY Japan Electricity- household electronic | 57.8
Vietnam Top Leading Brands Ranking (source: ACNielsen)
Analysis of economic factors
The average growth rate of GDP in the last five years is more than 6%, in
2011 is 6.3%, expected GDP growth in 2012 is 6.5% and the growth rate will be
higher than a previous year
GDP per capita increased from $ 730 in 2006 to $ 1,168 in 2010 and GDP per capita in 2011 increased at nearly $ 1,300
Economic structure continues to shift in the direction of increasing in
industry, construction, services and fisheries, agriculture and forestry reduction According to the market research group Euromonitor, in 2010 the Vietnamese
market food industry was $ 158.9 million and is one of three markets which have
leading growth in Asia-Pacific Ocean Vietnam is considered a country with great potential for food and service and a great opportunity for food processing
companies in general and Kinh Do Bakery 1n particular
However, in recent years, the inflation rate in Vietnam ts high and it affects
to people's consumption In 2011, GDP growth ts still high 6.3% but recorded
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inflation rate is super high) 18 13% From late 2011 to the early months of 2012 the Government has several measures to curbing inflation, but inflation rate forecast
my SESEEEESEESSESESESS SCS LOPS Sf POAT SS
Growth-Inflation Chart over the past 21 years Inflation chart in Vietnam and others Asia countnes in
In Vietnam 2010
Besides, due to the unstable situation in the Middle East to which Vietnam is
an importer of crude oil so this makes some product increas prices due to higher
shipping costs This poses a series of difficulties for the food processing industry including Kinh Do Bakery
Analysis of social factors
According to the General Statistics Office, at the end of 2011, the national average population is estimated at 87.84 million, increasing by 1.04% compared to
2010, in which the male 1s 43.47 million, makes up 49.5% total population, an
increase of 1.1% over 2010 Female is 44.37 million, makes up 50.5%, increases 0.99% Population of urban areas is 26.88 million, makes up 30.6% of the total
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population an increase of 25° compared to 2010 Rural population 60.96 million
makes up 69.4% increases 0 41%
Although Vietnamese culture is influenced by Eastern culture, bút Vietnamese families tend to refer traditional family meals more But with the market economy the multi-cultural integration is inevitable So people's consumption trends also change Fast and convinient meal that can meet the learning needs work meet friends partners have gradually replaced the
traditional family meal
This creates opportunities for the food retail industry selling fresh bread, fast
food And this is also the opportunity to develop Kinh Do Bakery stores
Technological factors
With the food processing industry, technology 1s an important factor This forces enterprises to constantly innovate technology Especially fresh bread industry, consumer tastes change frequently so it is a difficult problem for businesses
Besides food processing, technology of setting up a beauty shop model, attractive, drawing all eyes and mind of our customers is also very important factor This requires a serious investment for model shop and always catches up with the trend
In time
For large corporations like Kinh Do Bakery, access to the modern technology
in order to improve its position in the market is not a hard problem
We obtained a list of priorities for the elements by arranging from I ->18 Opportunities and threats in an order from the most important to the least
important, we have EFE matrix as follow:
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[-xternal Factors evaluation matrix( EEE )
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Opportunities
| Development trend of the market 1s good 0.1 4 0.4
lệ Franchising 1s a new business method 0.08 4 khôi
3 Young population and high urbanization 0.07 3 0.21
5 Stronger brand to competitor 0.05 3 0.15
6 Stable business enviroment 0.05 2 0.1
7 Stable economy, advance life 0.03 2 0.06
Threats
2 Many Substitute products 0.09 4 0.36
3 Short product life cycle 0.08 3 0.24
4 Customers taste changes constantly 0.07 3 0.21
6 Different between regions 0.04 3 0.12
7 Franchise is not popular in Vietnam 0.03 2 0.06
§ Material price increases 0.02 2 0.04
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threats of the environment business However, the current business environment
fluctuates each day, changes faster so Kinh Do Bakery must always innovate to
keep adapting seizing the opportunity to promote advantages
2.3.1.2 Micro environment analysis
M Porter's five competitive pressures (forces) analysis:
a-The threat of new entry:
The event Vietnam joined in WTO reduced the entry barriers And it showed that there were many organizations; foreign companies with the strong capital as well as advanced technology investing in Vietnam It also created favorable conditions for Kinh Do Saigon on access to modern technology, innovation in line with the trend
of integration
B-Negotiating power with suppliers:
Kinh Do Saigon is a member of the Kinh group, should be leveraged from the Kinh
group resources, especially in the supply chain
The main material for the current production of Kinh Do Bakery and Kinh Do Corporation include: flour, sugar, butter, milk, eggs Kinh Do Saigon also use a
number of other auxiliary materials but limited as: Mochi, lotus seed, green tea and other flavors List of main suppliers of Kinh Do Corporation:
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Viet Huong company
2 Ege | Saigon Agriculture Company
F— : | ` > `
3 Sugar Saigon Agriculture Company
Lam Son Sugar Joint Stock Company
Cooking oil Tuong An Oil Company
5 Wheat flour Binh Dong Wheat Flour Company
Import from Singapore
Daelrasl Tan Tien Company
slower economic growth (around 6.1% of GDP) make the price higher This creates
a disadvantage for the food industry to stabilize the market
However, due to the advantage of the negotiation in terms of the group, the Kinh Do
can negotiate with suppliers to keep prices thus creating a certain competitive
advantage over its competitors in the same industry
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Substitute products are the products with the same features and fuction being able to deteat the Company's product line
Because barriers to entry are removed the introduction of the giant fast food brand from abroad such as: KFC Lotteria, Jollibe upcoming Me Donald's besides the profound influence of traditional meal are substitutes that may threat bakery products
To meet the growing demand tor different tastes and preferences of consumers, it requires Kinh Do Bakery to improve product diversification strategy to meet the
needs of consumers
e-Rivalry winthin the industry:
Besides domestic rivals such as: Givral, Brodar, ABC, Hy Lam Mon, Sweet Home, Duc Phat and small manufacturing facilities, there are many famous brands entering
Vietnam market such as: Tous Les Jour, Bread Talk, Paris Baguette, Sunway
This shows that the foreign experts evaluate the retail market in Vietnam as a potential market, especially Ho Chi Minh City
So there are still a lot of opportunities for Kinh Do Bakery: sees the growth of the
market, sees weaknesses to make change, differentiates itself to compete with
competitor in the same industry as well as substitute products producers This helps
businesses change, innovate in the direction of developing better, stronger
Competitve profile Matrix (CPM) This matrix helps identity the competitors of
Kinh Do Bakery with their strengths and weaknesses
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KINH Do
Kev Factors of success BAKERY
No | a Weipbtl
rating rating rating
score score score
5 |High quality product |0.05 l3 0.15 2 0.1 2 0.1
Professional and self-