To build an outsourcing strategy for some products at akzonobel paints Vietnam

TO BUILD AN OUTSOURCING STRATEGY FOR SOME PRODUCTS AT AKZONOBEL PAINTS VIETNAM A.N.C CAPSTONE PROJECT REPORT Group No.: 8  VU CHI KIEN... TO BUILD AN OUTSOURCING STRATEGY FOR SOME PR

TO BUILD AN OUTSOURCING STRATEGY FOR SOME PRODUCTS AT AKZONOBEL PAINTS

VIETNAM (A.N.C)

CAPSTONE PROJECT REPORT

Group No.: 8

 VU CHI KIEN

TO BUILD AN OUTSOURCING STRATEGY FOR SOME PRODUCTS AT

AKZONOBEL PAINTS VIETNAM

GROUP 8:

Tran Duy Hoang: Team leader

Tran Duc Dien: Member

Dien Xuan Dung: Member

INTRODUCTION 6

1 Thesis title 6

2 The reason for choosing this topic/background analysis 6

3 The objective of the report 6

4 Scope of study 6

5 Study Methodology 7

6 Significance of the report 7

7 Report expectation 8

8 The thesis structure 8

CHAPTER I – THEORETICAL BASIS 9

1.1 Concepts, requirements and content of the Outsourcing strategy step process 9

1.2 Vision, mission and strategic goals of the Company 11

1.3 External environment analysis 12

CAPSTONE PROJECT REPORT

1.3.2 Analysis of Industry environment as per Michael Porter (5 resources) 13

1.3.3 Analysis of competitive environment 16

1.4 Analysis of the enterprise environment 16

1.5 SWOT Matrix 17

1.6 Business strategy 19

CHAPTER II – TO BUILD THE OUTSOURCING STRATEGY AT AKZONOBEL PAINTS VIET NAM (AKZONOBEL VN) 23

2.1 Overview of Akzonobel Paints Vietnam Ltd 23

2.1.1 About Akzonobel Paints Vietnam Ltd 23

2.1.2 The formation and development 23

2.1.3 Field of operations 24

2.1.4 The main products 24

2.1.5 Organizational Structure 24

2.2 Recent business performance 25

2.3 Mission, core value and strategic goals of Akzonobel Paints Vietnam Ltd 26

2.3.1 Mission 26

2.3.2 Core value 26

2.3.3 Strategic goals………28

2.4 External environment analysis 28

2.4.1 Macro environment analysis for Akzonobel Paints Vietnam Ltd (Pest) 28

2.4.1.1 Economic environment impacts 28

2.4.1.2 Political and legal environment impacts 29

2.4.1.3 Cultural and social environment impacts 30

2 4.1.4 Demographical environment impacts 30

2.4.2 Industry environment analysis of decorative paints (5 forces of Poster) 31

2.4.2.1 An analysis of potential rivals 32

2.4.2.2 An analysis of customer pressure 32

2.4.2.3 An analysis of potential alternate products 33

2.4.2.4 An analysis of supplier pressure 33

2.4.2.5 An analysis of potential rival pressure 35

2.5 Internal environment analysis of Akzonobel Paints Vietnam Ltd 35

2.5.1 An analysis of marketing competence 35

2.5.2 An analysis of management competence 37

2.5.3 An analysis of financial capability 37

2.5.4 An analysis of human resources 38

2.5.5 An analysis of employed technologies 39

2.5.6 An analysis of the communication system 40

2.6 SWOT analysis for Akzonobel Paints Vietnam Ltd 41

2.6.1 Strength 41

2.6.2 Weaknesses 42

2.6.3 Opportunities 42

2.6.4 Threat 43

2.7 Analysis for the Outsourcing strategy 45

2.8 Analysis for the choosing of products will be outsourced 46

CHAPTER III – SOLUTIONS, RECOMMENDATION AND CONCLUSIONS 48

3.1 Building long term strategic objective 48

3.2 Solution for outsourcing strategic implementation 48

3.3 Proposals/Suggestions 52

3.4 Conclusion 53

ANNEX 55

LIST OF TABLES Table 1-1: SWOT matrix……….18

Table 2-1: Company production and revenue over the past few years………26

Table 2-2: Company growth rate over the past few years………29

Table 2-3: Population density in cities and mountainous areas……… 30

Table 2-4: Population density by region……….30

Table 2-5: Formula of a paint product……….33

Table 2-6: Advertisement costs over the past few years……… 35

Table 2-7: The group revenue in 2008……….38

Table 2-8: Production of the factory in Binh Duong province………40

Table 2-9: SWOT of Akzonobel Paints Vietnam Ltd……….43

Table 3-1: Sale records of the North………48

LIST OF FIGURES Figure 1-1: Steps in developing the strategy……….8

Figure 1-2: M Porter model of five forces………14

Figure 1-3: Procedure for identifying sustainable competitiveness……….17

Figure 2-1: Company organizational chart………24

Figure 2-2: Outsourcing division organizational chart……….25

Figure 2-3: Marketing division organizational chart………36

Figure 2-4: Bath-based traditional paint production procedure………39

Figure 2-5: IT division organizational chart……….41

Figure 3-1: Outsourcing Model………57

LIST OF ABBREVIATIONS

SWOT matrix: Strength, weakness, opportunities, threat

Akzonbel Vietnam: Akzonobel Paints Vietnam Ltd

HSE&S: Health, Safety, Environment & Security

INTRODUCTION

1 The title of the Project:

Development of an outsourcing strategy for some products at AkzoNobel Paints Vietnam Ltd

2 The reason for choosing this topic/background analysis

Based on the actual need and situation of AkzoNobel Paint Vietnam Co., Ltd.:

 Limited supply to meet the market demand for paint and putty powder, particularly in the northern Vietnam where the company has no factory By using outsourcing services, the company shall be able to meet the customers demand at the soonest and reduce the cost transporting products from the south to the north given strongly increasing gasoline and electricity price recently

 Product development strategy taken by the company and the AkzoNobel Global in general is prioritizing the development of environmentally friendly product lines Therefore, solvent bourn paints and putty powder shall not be prioritized by the company Thus, the outsourcing of these products would be appropriate and necessary for the time being

From the above discussions, the company management has attached special importance to the assessment of feasibility and development of a detailed and comprehensive outsourcing strategy

3 The objective of the report

From the above requirement, the objective of this thesis is to study and develop an outsourcing strategy for some product lines by an external party Two main objectives of the thesis include:

 To assess and evaluate the efficiency/feasibility of the outsourcing strategy

 To develop a complete outsourcing strategy and apply it into reality

 Spatial boundary: AkzoNobel Paint Vietnam Co., Ltd

 Target groups of the study: Due to time constraint, the objective of the study and data and information availability is limited Therefore, the study only focuses on some key issues such as environmental macro-analysis, sector environmental analysis, and company internal environmental analysis, which serve as the basis for developing a complete outsourcing strategy for some product lines of the company

5 Study methodology

 Data and information collection

- Primary data is collected by actual observations at the factory based in My Phuoc Industrial Park, Binh Duong province, interviews with the management and employees and workers, etc

- Primary data is consolidated from the company reports and other references, including, books, newspapers, and reviews, etc

 Data processing method

- Comparison, analysis and consolidation: data from annual reports is compared, analyzed and consolidated to give comments

- Statistics: to make inventory of tables and data to come to a conclusion and forecast possible trends to assess the company operations

- Expert knowledge: to consult with experts involved in paint production industry

- SWOT: is a technique to analyze and process the business operations by combining strengths and weaknesses, risk and opportunities to propose a proper strategy

6 Significance of the report

In the world, outsourcing is a trend which is currently used by many companies, particularly national corporations, namely Unilever, Nike, and Idemitsu, etc

Therefore, the study of an outsourcing strategy for AkzoNobel Paint Vietnam Co., Ltd shall be of great significance It will help to reduce production cost, meet customer requirements in a prompt and most sufficient way (OTIF), and minimize some HSES related risks

7 Report expectation

Given the time constraint, the thesis expectations are quite limited Group 8 wishes to address the following issues:

 To assess the effectiveness of the outsourcing strategy

 To establish a detailed outsourcing model, covering the assessment of contractors and until the contract completion

 To assess the contractors after outsourcing assignment

CHAPTER I

THEORETICAL BASIS 1.1 Concepts, requirements and content of the Outsourcing strategy step process

Any company/organization shall need a proper business strategy This is a step towards establishing sub-strategies which shall all serve that company/organization business strategy And the “product outsourcing by an external party” shall not be an exception

 Definition:

There are many definitions of “business strategy” Nevertheless, the term “business strategy” has been commonly used and accessed by different scholars Business strategy

is considered as an art or a kind of planning (like Alain Threalart, G Arlleret, and D

Bizrell, etc.) However, one definition that has received a lot of agreement is: “Business

strategy is a collection of objectives and policies and plans which are set to obtain the above said objectives, and clearly reflect what business the company is and shall be doing and in what business areas”

 Strategy level

The strategy is planned at various levels, yet, it still has a close interlink The strategies of different divisions shall differ from each other, but sharing one goal of serving the company/organization overall strategy In any organization, strategies exist at various levels – covering the whole organization (or a group of enterprises) and even individuals working inside it

Company strategy: is the strategy that mentions the whole company Company

strategy largely talks about its list of products and diversifications of these products in order to take full advantage of the company spearheads In other word, the company strategy question would go like: “In what aspect should an organization compete?”

Business strategy: or the so-called product strategy or competition strategy

because an enterprise would compete in the market in with regards to individual product only Business strategy for each product type needs to answer such questions as: What are the objectives to be achieved? What is the competitiveness needed to obtain such

objectives? Who are potential key rivals? Central to a business strategy is to identify and enhance organization competitiveness in the concerned market

Functional strategy: Functional strategies such as marketing, finance and human

resources management, etc need to be combined to enhance competitiveness for the business strategy The key point of functional strategies is to specify value added that can

be given to customers as well to strategies at higher levels

Global strategy (international business): is the choice of heading towards

international business issues when a company is to diversify and upholder its operations

to outside the country

 Major characteristics of a business strategy

Business strategy specifies basic objectives and operation directions of an organization over a specific time period

The strategy orientation functionality shall help an organization to continuously develop and stand firm in its fluctuating business environment

Business strategy shall ensure the maximum mobilization and combination of the exploitation and utilization of organization available and future resources, making use of advantages and opportunities in its competition race

An organization business strategy is reflected in a closed and continuous process Business strategy tends to be moving forwards and winning in any business playground

Business strategy is often built up within a long time period (3, 5, or 10 years)

 Business strategy role

Business strategy helps an enterprise to be aware of its objectives and orientations, which function as a guide to its production and operation activities

Business strategy helps an enterprise to capture and take advantage of business opportunities and at the same time take necessary actions to overcome any threats and/or risks in the market

Business strategy contributes to improving the efficiency of resources utilization, enhancing company competitiveness and ensures its sustainable business and operational development

Business strategy creates firm bases for policy makers to issue policies and decisions in a timely accordance with the market situation

 Strategy development procedure

Strategy development flowchart:

Figure 1.1: Strategy development procedure

1.2 Vision, mission and strategic goals of the Company

The vision here refers to business orientations in future of the company In identifying the vision, a company is answering the question: “where will we go?” The answers include markets that they are pursuing, future focus on technology-product-customer and lastly type of company that the management is attempting to create and drive towards

Duty reflects important duties of a company with concerned business environment and normally demonstrated in its philosophy

Functions, duties & objectives of t company

strategy (1)

Internal analysis (S,W) (3) Business environment

analysis (O, T) (2)

Choice of strategy (4)

Company level strategy (5)

Business strategy, business units and

functional departments

Strategy implementation (6)

Operation review and evaluation (7)

Feedback

Objective is the desired final result that a company is attempting to attain An objective indicates the orientations for all decisions and forms measurement standards for actual implementation and monitoring

1.3 External environment analysis

External environment includes all the factors located outside a company that managers could not control but they have significant impacts on the implementation of its objectives, on its growth and profit generation External environment analysis covers the analysis of macro and sectoral (micro) environments Analyzing these factors shall enable a company to locate itself in the market and business environment characteristics, its era and to shape external environment impacts on its organization Thereby, a company shall make proper decisions during its strategy development process

1.3.1 Analysis of macro business environment (Pest)

Changes in macro environment may directly impact any forces in the sector, the relative strengths of the forces and the attractiveness of a sector Macro environment includes 5 sections: economy, technology, culture and society, demography and legal framework

 Economic environment

The status of the macroeconomic environment reflects the health, prosperity of an economy where it always has impacts on enterprises and the sector Economic environment indicates the nature and orientations of an economy within which the organization is operating Economy impacts on a company may include the change to value and income generation Four major components of a macro economy are: economic growth rate, interest rate, exchange rate and inflation rate

 Political and legal environment

A change in political and legal environment shall significantly influence a company business strategy implementation In fact, companies who invest in a region or across countries, they would pay attention to political environment, their impacts on the local government and vice versa In doing such political and legal environment analysis,

it is necessary to take into account such factors as economic reform, administrative

reform, changes to sectoral regulations, taxation policies, safety and environmental protection, and the issuance and revision of existing laws and regulations

 Social and culture environment

This includes social behavior and cultural values which create both opportunities and threats A company wishing to coexist with the time, partners and being socially accepted will have to respect cultural values in doing business Cultural and social values form the basis of a society; therefore it normally directs the changes related to technologies, politics, laws, economy and demography

 Demographical environment

This environment covers issues related to population, age structure, geographical distribution, communities and income distribution Consumption of commodities and services by residents in different locations and gender, age and occupation based consumption would affect the formation of markets and business strategy Life style influences demand for goods and services, including types, quality, shape and outward appearance and Population growth has positive impacts on the business strategy of a company

 Science and technology environment

Technological changes affect a large section of the society Main impacts are through technological products, including physical factors, activities related to generation of new knowledge, transformation of such knowledge into outputs, products, processes and new material Technology environment changes would bring about a company both opportunities and challenges Opportunities would be improved competence in producing new products with better competitiveness while the challenges could be direct or indirect undermining of a product lifecycle One key impact of technological changes includes impacts on the barrier magnitude and the shaping of the sectoral structure

1.3.2 Analysis of industry environment as per Michael Porter (5 resources)

A sector is defined as a group of enterprises supplying products or services which can be closely alternated to each other A close alternation means such products or services can basically satisfy customers to a similar extent

Sectoral analysis and competition are a set of viewpoints and techniques used to clarify issues related to:

+ Major economic characteristics of the sector

+ Rivals present within the sector and nature and strengths of each rivals

+ Driving forces rendering changes to the sector and their potential impacts

+ Who is the one creating intermediate services in the industry

+ Key factors to the success or failure of the sector

+ Attractiveness of the sector in terms of average profit generation

Sectoral environment is primarily affected by the followings:

According to M Porter, there five driving forces to competition in the sector as below:

(1) Likelihood of new company enrollment to the sector;

(2) Level of competition among existing companies in the sector;

(3) Negotiation strength of buyers;

(4) Negotiation strength of sellers;

(5) Threats from alternate product

Figure 1.2: Five competitive driving forces of M Porter

 Risk of new company enrollment to the sector:

In appealing markets, new rivals will appear in near future Although at present, they have not in place, strategists need to foresee this likelihood because these rivals often appear late but have abundant resources and a lot of experience They would compete with existing companies in the following aspects:

 Struggle for the market share by various means

 Compete in buying input material with existing companies by more flexible and attractive policies

 Lure skilled and qualified laborers by appealing incentives

 Negotiation strength of customers:

Buyers are considered as a threat when they in a good position to request for better price or better services: Negotiation position, number of buyers, information access to buyers, characteristics of goods, sensitivity to price, product differentiation, customer

Potential rival

Alternate products

Risk of new company enrollment

Threats from alternate products/service

s

Customer Supplier

Negotiation strength of supplier

Negotiation strength of customer

Existing rival

Competition intensity

concentration in the sector, alternate goods availability, customer motivation, vertical integration as buyers can use would threaten the supply

 Risk of alternate products:

Products by other sectors can serve customers needs similarly with the concerned sector The magnitude of impacts depends on: Cost of transferring product usage, alternate utilization tendency by customers, correlation between price and quality of alternate products

 Negotiation strength of suppliers:

The fourth force in the 5 force model by Porter is the negotiation strength of suppliers Suppliers can be considered as a threat when they force to raise the price or lower quality requirements for products or services they are delivering to the company, thereby, undermining the company competence in profit generation On the other hand, weak suppliers would provide the company with an opportunity to force the price down while insisting for better quality Like buyers, supplier supply competence depends in the relative power between itself and the company

 Competition intensity in the sector:

Operations in the market driven economy is likely to see competition This takes place when a company is challenged by actions by other companies or when another enterprise realizes an opportunity for them to improve their position in the market Different tools are normally used in the race to generate values for customers include price, quality, products/services identity, distribution, promotion, improvement and customer satisfaction The impact magnitude depends on: Sectoral competition structure, needs criteria, barriers to the withdrawal from the sector, fixed costs per value added, sector growth, capacity redundancy, product differences, transformation cots, characteristics of product brand name, diversification of rivals and sectoral screening

1.3.3 Analysis of the enterprise environment

To be successful, a company shall need to investigate its potential rivals as well as existing and potential customers To do so is particularly necessary when market grows

slowly because consumption can only be achieved by struggling for the market share from other rivals

The closest rivals to a company are those attempts to satisfy the same customers and needs and produce similar products The company shall pay special attention to silent rivals who may apply new methods to satisfy the same needs The company needs to identify such rivals through sectoral analysis or market based analysis

The company needs to collect information about strategies, objectives, strengths/weaknesses and reactions by its potential rivals It also needs to know the strategies of each rival to foresee and prepared necessary actions it may need to take in future Being aware of rival strengths and/or weaknesses, the company shall perfect its strategy to prevail on the rival weaknesses and know what are the strengths of the rivals

to avoid unnecessary dig-in Knowing typical responses by the rivals helps the company

to select and set a proper timeline for its action plan

Companies need to understand the followings about their rivals:

 Clearly identify their direct rivals

 Identify and analyze the strategies of their rivals

 Evaluate the strengths and weaknesses of their rivals

 Expect possible responses from their rivals

 Establish a database/information about their rivals

 Assess the correlation among their rivals

1.4 Analysis of the enterprise environment

 An analysis of a company resources

A company internal analysis is the study of what belongs to the company directly

or indirectly affecting the company operations with characteristics or the so called strengths or weaknesses of that company For the purpose of creating a database for developing and implementing a business strategy, yet the objects of consideration here is within the operation and control of the company Key indicators for internal analysis

include: marketing, finance-accounting, production capabilities, research and development, and human resources, etc

 Identification of a company competitiveness

The procedure for identifying sustainable competitiveness is as below:

Sustainable competitiveness

Much better competence than rivals Long term enough to become sustainable

Superior competence When core competence is much better than rivals’,

it becomes superior competence Core competence When core competence contributes to success, it becomes

core competence

Competence

Resources are used for production

- Intangible: trademark, commercial advantage, advantageous position, and R&D

- Tangible: assets and capital Resources Infrastructure, personnel, finance and

management, etc

Figure 1.3: Procedure for indentifying sustainable competitiveness

Company internal analysis is aimed at identifying potential as well as existing resources that form company competitiveness (strengths); and identifying barriers in sustaining such competitiveness (weaknesses) Therefore, a proper business strategy can be selected

in order to enhance strengths while address weaknesses existing within the company

1.5 SWOT Matrix

To build a SWOT matrix, first and foremost, it is necessary to identify opportunities and/or challenges from the concerned business environment, including strengths and weaknesses Next, strengths, weaknesses, opportunities and challenges are combined into SO, WO, ST, WT and place them properly in the SWOT matrix

To build the SWOT matrix, an administrator needs to follow 08 steps as below: Step 1: List down major opportunities from external environment (O1, O2…)

Step 3: List down major strengths of a company (S1, S2…)

Step 4: List down major aspects of a company (W1, W2…)

Step 5: Combine strengths and opportunities to form proper strategies (SO)

Step 6: Combine weaknesses and opportunities to form proper strategies (WO) Step 7: Combine strengths and challenges to form proper strategies (SO)

Step 8: Combine weaknesses with challenges for form proper strategies (WT)

Table 1-1: SWOT matrix

SWOT matrix

Opportunities ( O)

O1: List down opportunities in order of descending importance O2:

O3:

Threats ( T)

T1: List down threats in order of descending importance

 Cost reduction as a strategy

Reducing production cost is a strategy where companies need to have the best working conditions and strictly control costs to obtain better performance than their

rivals In this way, companies need to manage to reduce costs to a minimum extent incurred from its production

Following this strategy, companies have to target at obtaining abundant capital and making full use of its economic advantages In many cases, companies have to cut down part of other costs while at the same time spend necessary costs for R&D, focusing

on simplifying processes or production costs

 Resulting advantages:

+ Given low costs, companies can sell their products at lower price than their rivals in the same sector Companies also can avoid consequences of price competition with their rivals Meanwhile, they still do easy business and make profit even when input costs increase

+ Low price shall attract more low income customers or those customers caring only about product price Companies then shall have important advantages in the market

+ Low price is also considered as one of the tools applied by companies to prevent competition from alternate products and potential rivals to join the play ground

 Conditions for reducing production cost:

One of the most important conditions is to do business in a large market Large scale production with standardized final products shall contribute to lowering production cost, lowering price and stimulating consumption

Another condition would be production and business experience Thanks to experience in production, management and sale of final products, companies can improve and streamline its production processes, thus, enhancing productivity and lowering production cost

Production specialization is also another solution to lowering production cost because then products can be mass produced, and thereby, improving productivity and reducing costs

 Challenges in lowering production cost:

+ Lowering production cost than rivals may pose a risk of incomparable quality of products/services

+ Cost cut-down during production processes of products and services may devaluate them or make it impossible to produce products and services with desired quality

+ Methods used for reducing production cost may be known and applied by rivals

in similar way to compete against the companies and then the competition would become fiercer

+ When the consumption market is in its saturated status, product price difference shall be narrowed, and thus the competitiveness of this strategy would become less effective

+ Too much reliance on this strategy shall undermine other competitiveness aspects of companies, particularly quality related strategy or business flexibility

 Differentiation strategy

Product differentiation is a kind of competition strategy where companies attempt

to create the identity of a product or service from the same products or services offered

by their rivals in the market This is to raise attention from and attract customers Below are some ways:

 Product differentiation

 Sale service differentiation

 Form of product demonstration

 Technology renovation

 Product prestige

 Manufacturing optimum

 Product usability

 Product superiority in the market

 Customer acquisition and sustaining

 Rival control

 Price advantage

 Acquisition of loyal customers

 Conditions for companies to follow the differentiation strategy:

Differentiation in products or services created by companies shall make the companies themselves highly appreciated by the market However, to make it, companies shall need to meet the following conditions:

+ Companies need to have excellent competence in R&D for the concerned products and services They also need huge investment capital buying technologies for this important functionality

+ Companies need to have a pool of skilled and qualified laborers, who are leading experts and excellently creative professionals This will require significant amount of investment for human resources

+ Companies need to have a proper management apparatus that encourages the changes for the better, creativeness, and risk taking and enterprising minds

 Challenges against differentiation strategy:

+ Have certain level of competence with regards to technologies, human resources, R& D, and finance

+ Rivals may have the same policies and/or methods in the market; therefore, investment in human resources is always necessary

+ In case rivals have excellently high level of specialization and good market position, companies shall be hardly to surpass them by applying this strategy

+ Using differentiation as a guide to enhancing competitiveness will require a quite amount of investment, which may affect the company production performance

 Focus or concentration

Driving from the product differentiation and production cost reduction, companies may apply market focus strategy to sharpen their competitiveness Market focuses strategy targets at one market in a certain region or a group of customers Some key points of this strategy are as below:

+ Market focus strategy may go towards reducing production cost within a small scale market, which is clearly defined

+ Production differentiation: Market focus strategy means targeting at a market section or specific customers to create and demonstrate a possible differentiation, product and service superiority delivered by the companies

+ The choice of market focus is critical to demonstrating, exploring and implementing competitive advantages in the selected market

+ The choice of market focus shall also be demonstrated when companies set to diversify their products It can be seen that in order to obtain sensitivity and quick responses in the market as well as to customers’ needs, many of the company focus their business in a narrow market section or selected market

+ This competitive strategy may also create disadvantages or risks since companies concentrate too much on that selected market, thus, somehow losing their flexible control when there is change to real market

CHAPTER II

TO BUILD THE OUTSOURCING STRATEGY AT AKZONOBEL PAINT VIETNAM

CO., LTD

2.1 An overview of AkzoNobel Paints Vietnam Co., Ltd

2.1.1 About AkzoNobel Paint Vietnam Co., Ltd

Full name: AkzoNobel Paints Vietnam Co., Ltd

Transactional name: AkzoNobel Paints Vietnam Ltd

Head office: 5th floor, Kumho Plaza Building, District 1, Ho Chi Minh City

Telephone: 38221612 Fax: 38241104

Subsidiaries:

 Northern Vietnam (Hanoi Chamvit Tower-Grand Plaza)

 Central Vietnam (Da Nang city)

 Me Kong River Delta, Can Tho province

2.1.2 The formation and development

AkzoNobel Paints Vietnam Ltd is a 100% foreign invested company, under the AkzoNobel Global based in Amsterdam, the Netherlands In Vietnam, the company has operating for 10 years now, specializing in producing and supplying paints and industrial coatings

At present, the company is extending its business to producing and supplying decorative paints for civil construction and installations These include water based paint (WB), solvent-based paint (SB) and putty powder The head office is located at 5th floor, Kumho Building, District 1, Ho Chi Minh City and a factory in Binh Duong province In addition, the company has outsourced some of its products in order to meet the increasing demand in different parts of the country, particularly in the north

In 2008, the company has taken over the paints trade from the ICI Global The merging

2.1.3 Field of Operation

The company is operating as a paint and putty manufacturer Its’ products served

for whole country

2.1.4 Main products

In Vietnam, AkzoNobel Paints Vietnam Ltd is the biggest market share holder in

terms of production value The company holds 36% of the market share and 39% of the

total production value in the market

Core products: Dulux, Maxilite, and WheatherShield, etc

 Paint (including water bourn and solvent bourn paints: Dulux, Maxilite…)

 Putty powder (Dulux, Maxilie)

2.1.5 Organizational structure

The top management of the company is the General Director, followed by Vice

General Director, and Managers who support the General Director in managing different

aspects of the company

Figure 2.1: Company organizational structure

General Director

Business

Manager

Marketing Manager

H&R ManagerFinance

Production, Purchase, Outsourcing, Logistics, QA/QC, HSES, Tech

Figure 2.2: Outsourcing Department Organizational Structure

2.2 Recent business performance

Over the past few years, the world economic crisis in late 2008 has significantly affected the production and operations of enterprises in general and paint production industry in particular Therefore, a lot of companies went bankrupt or had to scale down and the competition in the market became so tough In spite of this, AkzoNobel Paints Vietnam Ltd had managed to sustain and promote its operations by taking full advantages of its well known trademark and recognized quality Below are details about the company production and revenues over the recent years:

Head of Outsourcing

Outsourcing

Supervisor in the

North (scheduled)

Outsourcing Supervisor in the South (scheduled)

Outsourcing Supervisor in the South (TNT for Putty)

Table 2-1: Company production and revenues over recent years

Year

PRODUCTION (Kg)

TOTAL (Kg)

Revenue (billion

VND)

Water Bourn paint

Solvent Bourn paint Putty

Since its establishment, AkzoNobel Paints Vietnam Ltd has constantly pursuing a

unique mission of “Add colors to people lives” In addition, the company has also been

prioritizing producing “green” products which are environmentally friendly and healthy

to human health Currently, paints produced by the company are the only product

certified with “green labels” by Singaporean government

2.3.2 Core value

Believes leverage our business

These values determine who we are and how we want to become We represent

the way we should operate And these values are summarized in the slogan “A today’s

solution for our future”

We trust in:

 Focusing on our customers’ future first

 Embracing entrepreneurial thinking

 The courage and curiosity to question

 Integrity and responsibility in our actions

Focusing on our customers’ future first

We can guarantee our future only by giving our customers products and services that improve their future So this value comes first It’s our priority and the reason why

we exist

We’ve always met the needs of our customers – that’s why we’ve grown But now

we make it very clear: it’s the basis of everything we do

Embracing entrepreneurial thinking

New thinking and new ideas are everything – if we’re to compete So we need an environment and a mindset that encourages new ideas from individuals and teams

“Yes”, not “Yes, but ”

“Why not?” not “Why?”

We might fail occasionally, but we’ll get great ideas to market more quickly as a result And we’ll keep more people with truly original ideas within the company

Developing the talents of our people

Our business will grow if our people grow too So we’re committed to

professional and personal development We’ll do all we can to develop existing talents, nurture new skills and progress within AkzoNobel Through this commitment, we’ll attract and retain people of the highest quality to develop the business

The courage and curiosity to question