Strategy for coffee export business of Thanh Ha production export-import joint stock company (Haforexim) in the period 2011 - 2015

CAPSTONE PROJECT REPORT STRATEGY FOR COFFEE EXPORT BUSINESS OF THANH HA PRODUCTION EXPORT-IMPORT JOINT STOCK COMPANY HAFOREXIM IN THE PERIOD 2011 - 2015 Le Quang Thai Ho Thi Thanh

CAPSTONE PROJECT REPORT

STRATEGY FOR COFFEE EXPORT

BUSINESS OF THANH HA PRODUCTION EXPORT-IMPORT

JOINT STOCK COMPANY (HAFOREXIM) IN THE PERIOD

2011 - 2015

Le Quang Thai

Ho Thi Thanh Nguyen Nguyen Dang Thanh Nguyen Trung Thanh

GRIGGS UNIVERSITY

GLOBAL ADVANCED MASTER OF BUSINESS

ADMINISTRATION PROGRAM

CAPSTONE PROJECT REPORT

STRATEGY FOR COFFEE EXPORT

BUSINESS OF THANH HA PRODUCTION EXPORT-IMPORT

JOINT STOCK COMPANY (HAFOREXIM) IN THE PERIOD

2011 - 2015

Le Quang Thai

Ho Thi Thanh Nguyen Nguyen Dang Thanh Nguyen Trung Thanh

Ho Nghia Cong

Class: GaMBA01.C0209

HO CHI MINH CITY 2011

REASSURE WORDS

We, Group 5, pledge that the content of the capstone project report has not been summitted to any MBA programs as well as any programs in any other level

We also commit that this capstone project report is a great effort by all group members to complete it The results, analysis and conclusions in this report (except quoted parts) are the result

of teamwork of our group

ON BEHALF OF GROUP 5 GROUP LEADER

Le Quang Thai

ACKNOWLEDGEMENTS

In order to complete the capstone project report, first of all our group would like to thank sincerely to Center For Education

Technology & Career Development of Vietnam National

University, and Griggs University to help us acquired knowledge

through the program of Global Advanced Master of Business

Administration

Our group would like to thank sincerely and deeply to all teachers who have enthusiasm to guide us to fulfill the capstone

project report as well as big-hearted teaching, assisting, and

facilitating for us to complete this course

We also send our sincere thanks to family, fellow brothers and sisters in Thanh Ha Production Export-Import Joint Stock

Company (HAFOREXIM), classroom management members,

and GaMBA01.C02 classmates had helped, encouraged, and

supported our group to complete the program and our work

CHAPTER I THEORICAL BASIS ABOUT STRATEGY FOR COFFEE EXPORT BUSINESS

4

1.1.1 Concepts about strategy 4

1.1.2 Concepts about business strategy 4

1.1.3 Concepts about strategic management 5

1.4.1 General environment PEST model 8

1.4.2 The five forces of competition model of Michael Poter 11

1.4.3 General model - SWOT analysis 13

1.4.4 Some models and other matrix analysis 15

1.4.4.1 Internal factor evaluation matrix 15

1.4.4.2 Competitive profile matrix 16

1.4.4.3 Strategic Position and Action Evaluation (SPACE) matrix 18

1.4.4.4 Quantitative strategic planning matrix (QSPM) 19

Summary of Chapter I 20

CHAPTER II REAL SITUATION OF BUSINESS OPERATIONS

FOR COFFEE EXPORT OF THANH HA PRODUCTION

EXPORT-IMPORT JOINT STOCK COMPANY

21

2.1.1 Process to be taken form and developed HAFOREXIM 21

2.1.2 Business careers 21

2.1.3 Organization model of HAFOREXIM 22

2.1.4 The labor situation of the Company 23

2.1.5 Vision, Mission and core values 25

2.1.6.1 Result of business operation of the Company 25

2.1.6.2 Quantity - Export turn-over of the Company 26

2.1.6.3 Comparing turn-over of export and profit of coffee commodity with

total turn-over of export and total profit of the Company

27

2.2.1 Overall about coffee sector 29

2.2.1.1 Situation of manufacture and consumption towards the coffee on the

world

30

2.2.1.2 Situation of manufacture and consumption Vietnam coffee 33

2.2.2 Analysis of business environment of the Company 38

2.2.2.1 Analysis according to general environment PEST model 38

2.2.2.2 Analysis according the five forces of competition model of Michael

Poter

50

2.2.2.3 Analysis according to general model - SWOT 56

2.2.2.4 Analysis according to other models 61

2.3 General assessment about situation for coffee export of the

Company

64

2.3.1.1 All objective advantageous factors 64

2.3.1.2 Subjective advantageous factors 65

2.3.3 Existed causes 66

2.3.3.1 Toward the State authorities 66

2.3.3.2 Toward companies and enterprises in the industry 66

Summary of Chapter II 68

CHAPTER III STRATEGICAL ERECTION OF COFFEE

EXPORT BUSINESS FOR THANH HA PRODUCTION

EXPORT-IMPORT JOINT STOCK COMPANY IN THE

PERIOD 2011 - 2015

69

3.1.1 Basing into developed target of the Company 69

3.1.2 Basing into ability, occasions and challenges of the Company 70

3.2 Strategy towards the export business of the coffee for Thanh Ha

Production Export-Import Joint Stock Company in the period of 2011 –

2015

72

3.2.1 Proposal strategies 72

3.2.2 Strategy selection 73

3.2.2.1 Some criterias to select strategy 73

3.2.2.2 Analysis QSPM matrix to select strategy 73

3.3.1 Solutions about source providing coffee 75

3.3.2 Solutions about science and technology 77

3.3.3 Solutions about finance 79

3.3.4 Solutions for development and penetration into market 81

3.3.4.1 Penetration and market development 81

3.3.4.2 Some measures about development and penetration into markets 81

3.3.5 Solutions about organization structure 82

3.3.6 Solutions developing human resources 85

3.3.6.1 Solutions erecting the line-up for cadres 85

3.3.6.2 To build the regulations to commend and reward - the discipline - the

standard and the assessment of the cadres in the business

Appendix 1: Coffee production in the world

Appendix 2: Robusta coffee production in the world

Appendix 3: Arabica coffee production in the world

Appendix 4: Area and production of Vietnam coffee from 2001 to 2010

LIST OF ABBREVIATIONS

AFTA ASEAN Free Trade Area

AGRIBANK Vietnam Bank for Agriculture and Rural Development

GDP Gross Domestic Products

HAFOREXIM Thanh Ha Production Export-Import Joint Stock Company

IS Industry Strength

PEST Political Economics SocialCultural Technological

QSPM Quantitative Strategic Planning Matrix

R&D Research and Development

SO Strengths Opportunities

SPACE Strategic Position and Action Evaluation

ST Strengths Threats

SWOT Strengths Weaknesses Opportunities Threats

TAS Total Attractiveness Scores

USD United State Dollar

VAT Value Added Tax

VICOFA Vietnam Coffee and Cocoa Association

VNĐ Vietnamese Currency

WO Weaknesses Opportunities

WT Weaknesses Threats

WTO World Trade Organization

MBA Master of Business Administration

FOB Free On Board

USA United State of America

BIDV Bank for Investment and Development of Vietnam

CEPT Common Effective Preferential Tariff

LIST OF TABLES

1 Table 1.1 Internal factor evaluation matrix 16

2 Table 1.2 Sample of Competitive Profile Matrix 17

3 Table 1.3 QSPM 19

4 Table 2.1 The labor situation of HAFOREXIM 24

5 Table 2.2 Results of business operations of the Company from

2006 to 2010

26

6 Table 2.3 Comparing turn-over of export and profit of coffee

commodity with total turn-over of export and total profit of

HAFOREXIM from 2006 - 2010

28

7 Table 2.4 Average consumed forces of coffee/person/year in some

markets of coffee import on the world in 2009

32

8 Table 2.5: Quota in comparison with two kinds of coffee seeds as

Arabica and Robusta

11 Table 2.8 The level of impact of the five forces of competition

model of Michael Poter on HAFOREXIM

55

12 Table 2.9 SWOT Matrix of HAFOREXIM 56-60

13 Table 2.10 Internal factor evaluation matrix of HAFOREXIM 61

14 Table 2.11 Competitive profile matrix of HAFOREXIM 62

15 Table 2.12 SPACE matrix of HAFOREXIM 63

16 Table 3.1: Analysis quantitative strategic planning matrix QSPM 74

LIST OF FIGURES, GRAPHS

1 Figure 1.1 Comprehensive strategic management model 6

2 Figure 1.2 General environment PEST model 9

3 Figure 1.3 The five forces of competition model of Michael Poter 13

4 Figure 1.4: SPACE Matrix 18

5 Figure 2.1 Organization chart of HAFOREXIM 24

6 Figure 2.2: Quantity and turn-over of coffee bean export of

12 Figure 2.8 Fluctuation about exchange rate between VND and USD

through all time from January 2009 to September 2010

45

13 Figure 2.9 Aggressive picture of the Company 64

14 Figure 3.1 : Model of source supplying coffee 75

15 Figure 3.2: Organization structure according to functions 83

PREFACE

1 Reason selecting theme.

The coffee is the commodity reserving for the manufacture and the business importantly with the economic foundation of our country The Vietnam Coffee Sector is more and more asserted through daily about the own position on the world coffee market From a small country manufactured the coffee up to now that Vietnam was rised to the second position on the world after Brazil Annually, the coffee sector brought back to the country with a quantity of turn-over considerably and having been already solved by the employment and stabilized the life for hundreds of households throughout in the mountainous regions, especially in Plateau Regions Those achievements were asserted the position, the role of the coffee sector in the national economic foundation contributing into the career to industrialize, to modernize the country

Thanh Ha Production Export-Import Joint Stock Company (HAFOREXIM) is

an enterprise then it is well asserting the own position to be worthy as one in the main force business careers of Company, mainly as the coffee export The Company contributed no small into the developed process of Vietnam Coffee Sector

However, in the recent years, it was due by the violent competition from the other nations, since then Vietnam had been encountered by many difficulties in the export for this commodity The market integration of the foreign groups and companies, and foreign representative offices has joined into the market share for the export coffee business in Vietnam and competed directly with the Company In that side, the demands of world market towards the coffee quality is more and more high through daily, and all products to be more and more diversified through daily, together with the competitive prices … The matters are the extreme challenges to be confronted The Company needs a strategical orientation correctly at the present stage in order to develop more strongly

To start from this real demand in plus with the knowledge was learned

whereby our fifth group is brave to select the theme towards “Strategy for Coffee

Export Business of Thanh Ha Production Export-Import Joint Stock Company (HAFOREXIM) in the period 2011 - 2015” for the capstone project report of the

group

2 Purpose to research

- It is to research in order to clarify about a business environment of the coffee export from HAFOREXIM through all periods towards the matter to learn from experiences of the advantages and the existences with the aim to perfect the strategical erection for the coffee export business of HAFOREXIM;

- It is to research in order to bring out all solutions enforcing the strategy;

- It is to research in order to build all petitions with the Government, sectores, and grades concerning to all prior matters, policies in the best support for the Export of Vietnam Coffee Sector

3 Objects and scopes to research

- The great exercise is only to research towards the generality about the situation of the manufacture, the consumption, the evolvement of the coffee business on the world market and the situation of the manufacture, the export for Vietnam Coffee in the past time and in the present time;

- It is to focus the research about the real situation for the coffee export business of HAFOREXIM in the past time and the present time;

- About the time to research: The time is to focus the research for the coffee export business operations from the period 2006 to 2010 and to build the export strategy for 2011 - 2015

the realization for the researched purpose of the theme

5 Sense of science and reality about theme

- It is to contribute clarifying about the situation of the manufacture, the consumption, the business of the coffee on the global market and Vietnam;

- It is to contribute clarifying the real situation for coffee export business of HAFOREXIM From that point, it was learned from experiences towards all advantages, existences and causes of existences;

- It is to contribute building the export coffee business strategy for HAFOREXIM in the period from 2011- 2015 with the aim to bring the highest business effect for HAFOREXIM;

- The theme is to use making the referential documents for some Coffee

Export Business Companies of Vietnam

6 All limits of theme

- It is due to the limit about the time to research thus the data collections are not yet diversified and selected highly;

- The theme is only applied for HAFOREXIM and some Coffee Export Business Companies as suitably that it is not universal applied widely for all Vietnam Coffee Export Business Companies

7 Structure of capstone project report

Preface

Chapter I Theorical basis about strategy for Coffee Export Business

Chapter II Real situation about operations of coffee export business for

Thanh Ha Production Export-Import Joint Stock Company (HAFOREXIM)

Chapter III Strategical solutions of coffee export business of Thanh Ha

Production Export-Import Joint Stock Company (HAFOREXIM) in the period from

2011 to 2015

Conclusion

References

Appendices

CHAPTER I THEORICAL BASIS ABOUT STRATEGY FOR

COFFEE EXPORT BUSINESS

1.1 Concepts.

1.1.1 Concepts about strategy

At present, there are many different definitions about the strategy, the basic cause having this difference as due to comprise all different conception systems about the organization in general and all different approached methods and about the strategy of the organization in particular

About ontology side, it is to depend according to the opinion of Positive Phylosophy Doctrine or according to the trend to create that the essemce of the strategy is defined according to the natural law or to have the significant impact of the subject In fact, the strategy is often defined according to the reality with the aim

to make the easiness of all practical processes in the organization

Johnson and Scholes (Exploring Corporate Strategy) define strategy as follows:

"Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations"

1.1.2 Concepts about business strategy

There are many ways to approach in order to understand about the business strategy but although it is to approach according to what way then the essence of the strategy business is still the draft in the future pictures of the enterprise in the operational zone and the exploitation capacity According to this understood way, the business strategy is to define:

- Where is the business trying to get to in the long-term (direction);

- Which markets should a business compete in and what kind of activities are

involved in such markets? (markets; scope);

- How can the business perform better than the competition in those markets?

(advantage);

- What resources (skills, assets, finance, relationships, technical competence,

facilities) are required in order to be able to compete? (resources);

- What external, environmental factors affect the businesses' ability to

compete? (environment);

- What are the values and expectations of those who have power in and around

the business? (stakeholders)

So, how it is the business strategy?

To synthetize all ulterior-examinted ideas about the business strategy, we

concreterize again following : “Business Strategy is the overall long-term goals,

policies and solutions to major business operation, financial, and human factor settlement in order to provide business acitivies of the enterprise to develope to a higher state of nature.”

1.1.3 Concepts about strategic management

The strategic management can be defined as an art and the science to establish,

to realize and to assess all decisions concerning to many functions allowing an organization to obtain all targets having been brought out So, we can see in this definition that the strategic management is to focus into the unification of the administration, the marketing, the accounting finance, the manufacture, the research for the development and all information systems in the business domains in order to obtain the success of the organization Let’s see Figure 1.1 on the comprehensive strategic management model in order to be seen by the picture about how it is the comprehensive strategic management

Figure 1.1: Comprehensive strategic management model (1)

1.2 Role of business strategy

The business operations in the competitive environment of the economic foundation in the present market to demand all enterprises that it must have the capacity to face with at all events and to assess correctly about the situation, the position of the oneself in order to bring out the decision if it ought to continue participating into the game or retreating out the game The modern business administration is to think that it cannot be resisted with all market changes if the enterprises have not a business strategy to manifest the initiative nature and the attack There is only on that basis; then the enterprises are just developed all occasions needing to make use or all menaces that it can happen in order to have the suitable reaction

To realize the external control in

order to define all

occasions and menaces as mainly

To choose strategy

To measure and to assess realization

To establish all targets yearly

To contribute all manpower sources

To bring out all policies

So, it can see that the business strategy helped for all enterprises to be oriented the way to rise to the future by all efforts of the oneself; to help the enterprises defining clearly all basic targets that it is to need obtaining in every period and it must grasp thoroughly in all grades, domains of the operations in the enterprises or in the agency with the aim to exploit and to use the best-case of all manpower sources, to bring into play all advantages and to grasp all occasions in order to get the advantages in the competition

In other words, the business strategy has the important special role; then it decides the success or the unsuccess of the enterprises It helps for the administor having a long-term view, as the basis to bring out all accurate decisions timely Simultaneously, it helps for the enterprises to make use the ready-existed strong points, and the occasion in the future in order to face, to limit the challenges, to overcome the weak points, to hold steady and to raise the position of the enterprises especially in the modern business environment today

1.3 Process to build business strategy

It is in order to carry out building the business strategy for the enterprises then it must be carried out according to order of all steps from the matter to analyse to forecast about the business environment until that the definition of all tasks in order to enforce,

to deploy the strategy If we don’t carry out according to an order then it cannot be built

by a suitable and correct strategy Therefore, it is in order to be able built by a suitable and correct strategy then it must obey all determined principles as follows:

Step 1: To analyse and to forecast about the business environment From that point, it is to analyse and to forecast the market

Step 2: To synthetize the analytical results and to forecast about the business environment according to two directions

- To define the opportunity, the occasion and all advantages about the business environment;

- Identify risks, threats and pitfalls of the market for business;

Step 3: To analyse and to assess the real situation of the Company

- The real situation of the finance;

- To analyse about the quantity, the quality, the structure of the work line-up;

- To assess correctly about the real situation, the organisation structure of company and the adapted capacity of this structure in front of the variations from the market and the new business conditions

Step 4: To synthetise the analytical results and to assess the real situation of the Company

- To define all strong points, all advantages in comparison of company in comparison with the competitors mainly on the market;

- To define all weak points, all diadvantages of company in comparison with the competitors mainly on the market

Step 5: To research all business philosophies, wills, aspirations of company Leaders

Step 6: To build all projects of the business strategy (to be taken form on the result basis of all steps 2, 4, 5)

Step 7: To compare, to assess and to choose the project of the business strategy In time to compare and to assess all strategical projects with each other, we have to use a system of all standards and norms And in time to choose the strategical project in order to join into the application in the reality, it has to base into the target in the strategical period of company

Step 8: To define all tasks with the aim to enforce, to deploy the strategy

- To concretize all strategical targets to become all programs and the projects

of the business, all projects in order to enforce the strategy;

- To build all policies, great solutions in order to deploy the strategy

1.4 Models to build business strategy

1.4.1 General environment PEST model

PEST Model is to research all impacts from all factors in the macro environment, that those factors are Political, Economics, Socialcultural, and Technological

Figure 1.2: General environment PEST model (1)

This is four factors having the direct influence to all economic sectores, that all those factors are such as: external enterprise and the sector, it must be influenced by its impacts to bring about as an objective factor All enterprises are to base on all impacts then it will bring out all policies and the business operations suitably

- Political factors: This is the factor having the influence range to all

business sectores on a territory - All factors of political can bully to the developed and existed capacity from any sector In time to carry on business on an administrative unit, all enterprises will oblige to obey the factors of political at that zone as: Stabilization, all concerned policies, and acts

- Economic factors: All enterprises are to pay attention to the economic factors

together with the short-term, the long-term and the intervention of the government to the economic foundation Normally, all enterprises will base on the economic factors

in order to decide the investment into all sectores, all zones as: the state of the economic foundation, all impact factors to the economic foundation (Interest rate, inflation), all economic policies of the governement (to reduce taxes, to subsidize ) the economic prospects in the future (Growth speed, Increased price level, Gross Domestic Product, Rate of Gross Domestic Product on the investment capital )

- Socialcultrural factors: Each nation, territory region are even to have all

cultural values and specific social factors and then those factors are the particular trait of the consumers in those zones

Environment

Political

Economics

Socialcultrural Technological

All cultural values are the values to make a society that it can look after for that society to be existed and developed Just consequently, all cultural factors normally are protected in the large-scale extremely and closely Especially it is the moral culture However, we cannot also deny all cultural interferences of all other cultural foundations entering all nations These interferences will change the spychology of the consumption, the lifestyle, and to create all developed prospects together with all sectores

In the cultural side, all particular traits about the society are also to order all enterprises to be interested in time to research the market that all social factors will divide the community to become all customer groups, each group to have the particular traits, the psychology, and the income as differently:

+ Average longevity, health state, nutritive regime, and eating-drinking; + Average income, income distribution;

+ Lifestyle, knowledge, opinion about aesthetic, and life psychology;

+ Life conditions

- Technological factor: The whole world is still in the process of the

revolution life; the mass of the new technologies which are came out into society and to be integrated into all products, services If recently as 30 years ago, the computers were only the available instruments in order to calculate that nowadays they have the sufficient functions to replace human to work to be independent entirely Formerly we used all cameras by the film that at present it is no longer any firm to manufacture the film for the camera Especially in the information technology domain and the modern telecommunication technology helped all

distances about the geography, the load-transmit means

+ Investment of the government, the enterprises joined in the mission to research and to develop

+ Speed, cycle of technology, backward technology rate

+ Influence of information technology, internet to business operations

Out the above basic factors, at present in time to research the market, all enterprises have to bring the globalized factors to become a macro factor to impact

to the sectores

- Integrated factors: Nobody can deny the globalization which is in the

process of the general trend that this general trend doesn’t create the occasion for the enterprises and all nations in the development of the business manufacture

+ The globalization is to create all competitive forces that all competitors came from every zone The integrated process will induce all enterprises to be adjusted suitably with all compared advantages, to assign the tasks for the workers

of the zone and the world

+ The important thing is in the intergrated time, then all barriers about the commerce which is conducted to remove whereby all enterprises will have the occasion doing the business together with the partners to be far away from the geographical zone where all customers of the enterprises in this moment is not only

as the domestic market at the enterprise place in the process of the business but it is still as the customers to come from everywhere

P.E.S.T Model at present, it was enlarged to become all P.E.S.L.T matrixes (including factors L: Legal - Law) and S.T.E.E.P.L.E (Socical/Demographic- Demography, Techonogy, Economics, Environment, Policy, Legal, Ethic - Morality) and to be more and more perfected through daily to become an integral standard in time to research the exterior environment of the enterprises

1.4.2 The five forces of competition model of Michael Poter

Michael Porter, the top competitive and stratetical former in the present world, provided a theorical frame in order to analyse In which, he modernized the model of all enterprises and to think that any business sector is also sustained the impact of the competitive strength All strategists are seeking the joined position to

be more dominant than all opponents that it can use this model with the aim to know thoroughly more than from the business sector that they are operating

Five forces of competition of Michael Poter (Porter’s Five Forces) was published in the first time on Harvard Business Review in 1979 with the contents to learn about the factors creating the profit in the business This model, is often called

as “Five competitive forces of Porter”, to be considered as the effective and useful

instruments in order to seek the profit origin It is more important entirely that this model provided all competitive strategies so that the enterprises are to maintain or

to increase the profit

All enterprises are often to use this model in order to analyse if they ought to integrate in a certain market or to operate in a certain market, yes or no? However, because the business environment as nowadays is to bring the character “moved”, therefore this model is still applied in order to seek in a determined sector of all zones needing to be improved in order to generate many the profit over

According to Michael Porter, the competitive intensity on the market in any business sector to be sustained by the impact of five competitive forces as follows:

- Threat of new entrants (Barriers to entry): Economies of scale, product differentiation, capital requirements, switching costs, access to distribution channels, cost disadvantages independent of scale, government policy, expected retaliation;

- Bargaining power of suppliers: Supplier power increases when: Suppliers are large and few in number - Suitable substitute products are not available - Individual buyers are not large customers of suppliers and there are many of them - Suppliers’ goods are critical to the buyers’ market place success - Suppliers’ products create high switching costs - Suppliers pose a threat to intergrate forward into buyers’ industry;

- Bargaining power of buyers: Buyer power increases when: Buyers are large and few in number - Buyers purchase a large portion of an industry’s total output - Buyers’ purchases are a significant portion of a suppliers’ annual revenues - Buyers’ switching costs are low - Buyers can pose threat to intergrate backward into the sellers’ industry - Buyer has full information;

- Threat of substitute products: The threat of substitute products increases when: Buyers face few switching costs - The substitute product’s price is lower - Substitute products’ quality and performance are equal to or greater than the existing products Differentiated industry products that are valued by customers reduce this threat;

- Intensity of rivalry among competitors: Industry rivalry creases when: There are numerous or equally balanced competitors - Industry growth slows or declines - There are high fixed costs or high storage costs - Ther is a lack of differentiation opportunities or slow switching costs - When the strategic stakes are high - When high exit barriers prevent competitors form leaving the industry

1.4.3 General model - SWOT analysis

The analytical model of SWOT is a very useful instrument for the matter to grasp and to make the decision in every at all events towards any business organization Abbreviation of 4 Words: Strengths, Weaknesses, Opportunities, and Threats, SWOT to provide a strategical analysis, to check and to assess the position,

the orientation of a Company or a business project SWOT is suitable with the

matter to work, to analyse according to the group to be used in the matter to

of suppliers

establish the business plan, to build the strategy, to assess the competitors, the marketing, the development of the products and the services

SWOT Model is often to bring out 4 basic strategies:

(1) SO (Strengths - Opportunities): all strategies are to base on the strengths

of Company in order to make use all market opportunities;

(2) WO (Weaknesses - Opportunities): all strategies are to base on the capacity to overcome all weaknesses of Company in order to make use the market opportunities;

(3) ST (Strengths - Threats): all strategies are to base on the advantage of company in order to avoid all threats of the market;

(4) WT (Weaknesses - Threats): all strategies are to base on the capacity to overcome or to limit in maximum about all weaknesses of company in order to avoid all threats of the market

It is in order to realize SWOT analysis for the competitive position of a Company, then one is often self-put all questions as follows:

- Strengths: What are the own advantages? What are the jobs to be done in the best way by the oneself? What is the manpower source that the oneself is to need as possible in use? The advantage that the other people as can see about the oneself, what it is? It should examine the problem from on the own aspect and of the other people It is to need the reality without humbleness All advantages are often taken form in time to compare with the competitors For example, if all competitors are even to provide all products with the high quality then a manufactured process with the quality so… It is not the advantage that it is the necessary thing rightly to have in order to exist on the market;

- Weaknesses: What thing is possible to improve? What jobs are done in the best way? What is necessary to do? It should examine the problem on the internal basis and together with the external basis The other people can see the weak points that the oneself doesn’t see Why the competitors are to do more good than the oneself? In this moment, it should be considered by the real way and to confront with the truth;

- Opportunities: Where are staying all good occasions? What trend is worthy

interested already known? The occasions can start from the change of the technology and the market although it is the International or in the narrow scope from the change in the policy of the State concerning to the operational domain of the Company, from the change of the social pattern, the population structure or the fashioned structure , from all events happening in the zone The modes to seek the best useful matter are to check again all advantages of the oneself and to be self-put the questions if all those advantages have to open any new occasion, yes or no? It can also do conversely, to check all weak points of the oneself and to be self-put the questions if there are any occasions appearing if it is rejected them;

- Threats: All threats are encountering? What are doing all competitors? All specific demands about the jobs, about the products or the services if there are any changed things? If there are any dangers to the technological change with Company, yes or no? If there are any problems about the overdue debt or the money line? If there are any weak points in course to menace the Company, yes or no? Those analytical matters are often to help finding all matters to be necessary done and changed by the weak points to become the prospects

The analytical quality of SWOT model is to depend into the information quality to be well gathered The information is necessary to avoid the subjective view from a side then it ought to seek the information from every side: directorates, customers, partners, suppliers, strategical partners, consultants SWOT has also the limited part in time to arrange all information with the concise trend This thing is to

do for much information that it can be affected into the unstable position with the problem nature Many items can be neutralized or mistaken between two poles as S-

W and O-T due to the opinion of the analysts

1.4.4 Some models and other matrix analysis

1.4.4.1 Internal factor evaluation matrix

Internal factor evaluation matric is a strategic management tool for auditing

or evaluating major strengths and weakness in functional areas of a business

Table 1.1: Internal factor evaluation matrix

- To list all key internal factors such as: Spirit of personnels, quality of products, rotated funds

- Weight: To assign a weight that ranges from 0.00 to 1.00 to each factor The weight assigned to a given factor indicates the relative importance of the factor Zero means not important One indicates very important Make sure the sum of all weights equals 1.00

- Rating: Assign a 1 to 4 rating to each factor: A major weakness rating as 1,

a minor weakness rating as 2, a minor strength rating as 3, and a major strength rating as 4

- Weighted score: Multiply each factor’s weight by its rating This will give

us a weighted score for each factor

- Sum the weighted scores for each factor This will provide the total weighted score for your business

- Regardless of how many factors are included in an Internal Factor Evaluation Matrix, the total weighted score can range from a low of 1.0 to a high of 4.0 The average score you can possibly get is 2.5 Total weighted scores well below 2.5 point to ingternally weak business Scores significantly above 2.5 indicate a strong interal position

1.4.4.2 Competitive profile matrix

Table 1.2: Sample of Competitive Profile Matrix

- To list all success factors such as: market share, price competition, financial

position, product quality, faithfulness customers

- To fix the weight of each factor from 0.0 (not important) to 1.0

(important) Sum of all assigned weight to factors must be equal to 1.0

- Rating in CPM represents the response of firm towards the critical success

factors Highest the rating better the response of the firm towards the critical

success factor, rating range from 1.0 to 4.0 and can be applied to any factor The

response is poor represented by 1.0; the response is average represented by 2.0; the

response is above average represented by 3.0; the response is superior represented

by 4.0

- Weighted score value is the result achieved after multiplying each facor

rating with the weight

- After that, compare total weighted score between the Company with

Competitive Companies 1 and Competitive Company 2

1.4.4.3 Strategic Position and Action Evaluation (SPACE) matrix

On the market, so each enterprise is even to have the position of the oneself,

to have the enterprise to lead the market, to have many enterprises to be behind the times and to have many enterprises to join into the sector market It can use SPACE matrix in order to define the enterprise position on the market

SPACE matrix is to show that an enterprise ought to select the strategy: aggressive, conservative, defensive, and competitive All axis of the SPACE matrix

1.4.4.4 Quantitative strategic planning matrix (QSPM)

QSPM is a tool that allows objective evaluation of the strategy to lead to possible strategic options

Table 1.3: QSPM

Main factors

Possibel strategic options

Rating

AS TAS AS TAS AS TAS AS TAS Internal factors

- Rating is assigned from 1 to 4 Major weakness is represeted by 1; minor weakness is represented by 2; minor stregth is represented by 3; and major stregth is represnted by 4

- AS is attractiveness score; TAS is total attractiveness score

- Internal factors: 1 = major weakness; 2 = minor weakness; 3 = minor strength; 4 = major strength

- External factors: 1= poor response actions of the company; 2 = averagre response actions of the company; 3 = above averagre response actions of the company; and 4 = superior response actions of the company

Summary of Chapter I

In the present background, there are many great changes about the business environment, the competitive market that it is more and more manifested through daily by a clear way, then the enterprises want to be successful in long-term, to stabilize and to develop solid which to be sure, it must have the suitable business strategy In order to build the business strategy of the enterprise, we have to analyse all exterior environment factors as well as the internal matter of the enterprise in order to be defined all agents influencing to those operations

In Chapter I, the capstone project report of group 5, we put forward some basic arguments about the strategy such as: All concepts about the strategy - the role

of the strategy, the process to build the business strategy - all models to build the business strategy

All basic knowledges about the theory and the administration of the business strategy mentioning in Chapter I as the basis, foundation for the matter to build the business strategy of the coffee export of HAFOREXIM Companny that it will be mentioned to the next chapters

CHAPTER II REAL SITUATION OF BUSINESS OPERATIONS FOR

COFFEE EXPORT OF THANH HA PRODUCTION

EXPORT-IMPORT JOINT STOCK COMPANY

2.1 Overall about HAFOREXIM

2.1.1 Process to be taken form and developed HAFOREXIM

HAFOREXIM was taken from 1990 having Thanh Ha Name as a owned enterprise to belong to the Union of Manufacture - Services and Export - Hanoi Small Scale Industry to belong to the management of People Committee in Hanoi City

state-Until 2005, Thanh Ha Company was privatized and changed to Joint-Stock Company according to the Decision number 1302/Decision-Committee, on March

18th, 2005 of People Committee in Hanoi City to name again as Thanh Ha Production Export - Import Joint Stock Company (HAFOREXIM)

Address of main head office: 122-123 M2, Lang Trung - Đong Đa - Ha Noi International transaction name: Thanh Ha Production Export - Import Joint Stock Company

Abbreviated transaction name: HAFOREXIM

Logo:

2.1.2 Business careers

- Manufacturing, processing and doing business all commodities such as garments, industrial commodity, small scale industry, agriculture, forest products, seafood, drug, and mineral serving for the export demands and the consumption in the country;

- Services of hotel - building;

- Agent, representative for all economic units in the country and abroad;

- Import-Export for textile commoditites;

- Trading as forwader for import-export commodities;

- Importing and trading for materials, raw-materials, means and consumed commodities serving for manufacture demands of the Company and market;

- Importing and trading for spare-parts of machines, equipments of food, foodstuff, transport mean of chemical, serving for manufacture demands;

- Trading, renting workshop house, ground

Rule capital: 12.7 Billions VND in which 30% capital from The State and 70% capital from shareholders

2.1.3 Organization model of HAFOREXIM

The organization model of the Company is to include many different office sections and grades having the tasks concretely, clearly, independently with each other but there is the intimate relation with each other, to support each other It is accepted the matter to manage, to oversee from the management superiors according to the matter to assign tasks and the functions to be manifested through the Figure 2.1, all functional sections of the Company including:

- Council of Shareholders is the highest decision makers of HAFOREXIM Council of Shareholders has the following powers:

+ Approve, add and revise regulations;

+ Approve development direction of the company, annual finiancial statements, and reports of Administration Council, Supervisory Board;

+ Decide annual dividends paid;

+ Decide the number of members of Administration Council;

+ Elect and dismiss members of Administration Council, Supervisory Board; appove for Administration Council, and appoint General Director;

+ Other rights stipulated in regulations

- Administration Council has full power to carry out right in the name of the Company, except under the authority of Council of Shareholders that is not authorized

- Supervisory Board was elected by Council of Shareholders, on behalf of shareholders, controls all activities of management and executive business of the Company as well as is responsible to Council of Shareholders and the law But their work is executed based on their powers and duties stipulated by company regulations

- Board of Directors was elected and dismissed Members of Adminsistration Council are concurrently members of Boards of Directors

- Sections, Boards, and Busisness Unit:

+ Administration section;

+ Finance and accounting section;

+ Import - Export section no.1, 2, 3;

+ Ho Chi Minh Sector;

+ Hưng Yen Sector

To cater for all aspects of work, the company also has other organizations, polictics such as parties committee, trade union, and youth union

2.1.4 The labor situation of the Company

The company has a labor force with high quality They are always enthusiastic; have sense of responsibility and aggressive in their work Every year the company regularly organizes training courses for improving professional knowledge and foreign languages for all employees Training was held in various forms such as on site training, training via Internet, invited teachers for training With level improved, they are better able to adapt with the change of current business Overall, this is the first condition and decided factor to ensure the development of the company in future Let see Table 2.1 for the labor situation of HAFOREXIM

24

Table 2.1: The labor situation of HAFOREXIM

Export Division

Export Section

Import-No 1

Export Section

Import-No 2

Export Section

Import-No 3

Council of Shareholders

Sector

Ho Chi Minh Sector

Hưng Yên Sector

2.1.5 Vision, Mission and core values

- It is to form the strong brand name for the Company;

- It is to contribute actively into the durable development of Vietnam coffee sector on the international market

2.1.5.3 Core values

- Customer focus;

- Take professional aspect as a standard to serve customer;

- Create transparency in thinking and action;

- Make differences, diversity; Direct to highest quality;

- Create strength and break through by team alignment;

- Respect and protect environment

2.1.6 Results of business operations for coffee export of the Company from 2006 to 2010

2.1.6.1 Result of business operation of the Company

Let see Table 2.2 Result of business operation of the Company from 2006 to

2010 Beside coffee business, HAFOREXIM also do business operations on export other products such as pepper, cashew, cassava products, pharmaceuticals, towels, tea, and iron and steel…

Therefore, we can see that HAFOREXIM is interested in export business Percentage of export turn-over is big and it can be said that export business is the main business of the company

Table 2.2: Results of business operations of the Company from 2006 to 2010

2.1.6.2 Quantity - Export turn-over of the Company

Figure 2.2: Quantity and turn-over of coffee bean export of HAFOREXIM

from 2006 - 2010

Let look into Figure 2.2(1) then we see the quantity and the turn-over of the export increased through all years 2006 with the quantity obtaining 12,580 tons and the turn-over obtaining 14.91 millions USD to 2010 which increased the quantity as 23,870 tons and the turn-over as 36.21 millions USD This thing shown that the

Company from 2006, the developed direction increased according to the large-scale about the export quantity Howeve, the increase towards the export-quantity didn’t also bring about the equilateral increase of the export turn-over in the Figure 2.2 to show in 2008 that the quantiry is 16,760 tons, the export turn-over as 35.56 millions USD but until năm 2009, the quantity increased 21,570 tons meanwhile the turn-over again decreased in comparison with 2009 as due to the coffee price of the export to be decreased strongly in 2008, that the cause of this price decrease is due

to the matter to be influenced over greatly by the global economic foundation regression To look at about the export price, we have also more remarks that the prices were variable very abnormally through all years This is the difficult factor but it is also as an occasion so that the Company is obtained the good effect in the

business of the coffee export

2.1.6.3 Comparing turn-over of export and profit of coffee commodity with total turn-over of export and total profit of the Company

Because the limit about the time, it is to research as well as in order to compare the simplification then the author group is only to compare about the coffee export with the total turn-over of the export of the Company but is not to compare with the whole business operations of Company

Through the Table 2.3, we can see that the coffee export rate compared with the export turn-over of the whole the Company from 2006 which appropriated as 32.92% and increased gradually through all years to 2008 which appropriated as 50.91% and to be deducted into 2010 that it was only appropriated as 45.85% about the export turn-over of the whole Company It is to examine about the profit however 2006 and 2007, the rate of the coffee export turn-over appropriated under 50% of the export turn-over of the Company but the profit rate appropriated to 60.95% in 2006 and 64.22% in 2007 Until 2010 the turn-over rate deducted 45.85% but the profit rate was still high relatively as 46.48% in comparison with the whole export profit of the Company

Table 2.3: Comparing turn-over of export and profit of coffee commodity with total turn-over of export

and total profit of HAFOREXIM from 2006 - 2010

Turn-over from coffee export

Total profit (USD 1.000)

Profit from coffee export

Turn-over (USD 1.000)

Appropriated proportion (%)

Profit (USD 1.000)

Appropriated proportion (%)