Busniness startegy for anvifish 2012 - 2016

BUSINESS STRATEGY FOR AVF 2012 2016 CAPSTONE PROJECT REPORT GROUP 1 INTRODUCTION In recent years, seafood export is one of the strengths of Viet Nam, contributting from 3.5 % to 4% of

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GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION

CAPSTONE PROJECT REPORT

BUSNINESS STRTEGY FOR ANVIFISH

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BUSINESS STRATEGY FOR AVF 2012 2016 CAPSTONE PROJECT REPORT GROUP 1

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LIST OF CONTENTS INTRODUCTION 4

CHAPTER 1: OVERVIEW OF THEORIES RELATED TO STRATEGIC MANAGEMENT 6

1.1 An overview of strategic management theory 6

1.1.1 The concept of strategic management 6

1.1.3 Process of Strategic management 8

1.1.4 Tools for strategy formulation and seclection 12

1.2 Overview of pangasius processing and exporting in Vietnam: 15

1.3 The necessary of planning strategy for the Company 21

CHAPTER 2: BUSINESS SITUATION OF ANVIFISH 23

2.1 Overview of Enterprise 23

2.1.1 Foundation and development 24

2.1.2 Organizational structure and Management 27

2.1.3 Main business activities of AVF 29

2.1.4 Technology Capacity 31

2.1.5 Business performance and financial status from 2008 to first half of 2011 33

2.2 Internal Environment 37

2.2.1 Management activities 37

2.2.2 Marketing 40

2.2.3 Finance and Accountant 41

2.2.4 Operation management 44

2.2.5 Research and Development of product (R & D) 45

2.2.6 Information system in the company 46

2.2.7 Core competitive advantages of the company 46

2.3 External environment factors 47

2.3.1 Macro Environment 47

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2.2.1 Competitors 52

2.2.2 Competitors analysis 54

2.2.3 Advantages and disadvantages from macro factors impact on processing and exporting pangas us 59

CHAPTER 3: BUSINESS STRATEGY FOR VIET AN JSC 2012 -2016 62

3.1 Strategy formulation for AVF 62

3.1.1 Defining strategic targets 62

3.1.2 Strategy implementation schedule 2012 – 2016 62

3.1.3 Formulating and choosing business strategies 63

3.2 Organization solutions to implement selected strategies 75

3.2.1 Financial solutions 75

3.2.2 Solution to operation management 75

3.2.3 Marketing solution 76

3.2.4 Human resources solution 78

PROPOSITION 79

CONCLUSION 80

REFERENCES 81

LIST OF FIGURES Figure 1.1: The process of strategic management……… 9

Figure 1.2: Factors affecting the macro environment……… …11

Figure 1.3: Model of five competitive forces M Porter………11

Figure 1.4 - Structure of production of aquatic products for export in 2011………17

Figure 2.1: Organizational structure and management of AVF……….28

Figure 2.2: Some main products of Anvifish……….31

Figure 2.3: Manufacturing process of frozen pangasius fillet in block/IQF……….….33

Figure 2.4 Chart of quatity and sales of AVF to markets……… 36

Figure 3.1: Illustration of selected strategy of AVF through SPACE Matrix……… 70

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LIST OF TABLES Table 1.1: Process of strategy formulation………13

Table 1.2 : Internal – External Matrix……… 14

Table 1.3 : Competitive Image Matrix……… 15

Table 1.4: SWOT Matrix……… 15

Table 1.5 - Statistical pangasius export value in markets 2009-2011……… 18

Table 1.6 - Top 20 importing markets in 2011 in term of growth……… 19

Table 1.7 - Top 20 importers of pangasius in 2011……… 20

Table 2.1: List of some certificates and awards of AVF……… 26

Table 2.2: Sales of AVF from 2008 to 2011 ……… 30

Table 2.3 - AVF’s performance during period of 2009 - 2011……… ……… 34

Table 2.4 - VAF’s business performance changes over years……… 34

Table 2.5 - AVF’s Expense/net revenue changes over years……… 35

Table 2.6 – export sales in markets……… 36

Table 2.7 - List of some members of AVF’s Board of Directors……….…38

Table 2.8 - Labor resource by qualification of AVF (2009-2011)……… 41

Table 2.9: Cash flows in brief of AVF 2008 – 2010……… 42

Table 2.10: Typical financial ratios of AVF ……… 43

Table 3.1: The strategy implementation schedule of AVF 2012 – 2016……….63

Table 3.2: External Factors Evaluation matrix ………63

Table 3.3: Image competition matrix for AVF……….65

Table 3.4: Internal Factors Evaluation matrix for AVF ……… 65

Table 3.5: SWOT Matrix for AVF……… 66

Table 3.6: SPACE matrix of Anvifish……….69

Table 3.7: Internal – Extenal Factor Matrix……….70

Table 3.8: alternative strategies conclusion……….71

Table 3.9 : QSPM matrix – Group of centralized strategies………71

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BUSINESS STRATEGY FOR AVF 2012 2016

CAPSTONE PROJECT REPORT GROUP 1

INTRODUCTION

In recent years, seafood export is one of the strengths of Viet Nam, contributting

from 3.5 % to 4% of GDP, creating jobs for over three million people and is one of

three largest export industries in term of value, just following crude oil and

garments

In the period from 2006 to 2011, fishery was one of highest growing industries of

Vietnam, at about 15% In 2010, marine foods export value of Vietnam was over of

$ 5 billion and that is expected to reach about $ 6 billion in 2011

For exported seafood products, pangasius fillets could be seen as one of the staples,

accounting for about 28 % to 30 % of total seafood export value, being exported to

about 136 countries in the world This product is considered as potential field that

opens up many opportunities for the fishery exporting companies

Besides these achievements, the companies processing and exporting pangasius has

been facing to many difficulties and challenges from the subjective and objective

factors such as: the volatility of raw materials due to environmental pollution,

disease outbreaks; workers are not stable due to competitiveness of internal

industrial enterprises; increase in barriers from foreign markets, especially the U.S

and EU; competition among the peers and so on…

As a fishery processing and exporting company, ranked in the top 10 fishery

exporters of Vietnam in term of export value, Viet An Joint Stock Company is

headed for many opportunities and challenges Therefore, formulating "business

strategy period 2012 - 2016" is very necessary to promote the strengths and limit

weakness, seize opportunities and avoid threats from the external factors in the

future

- Objectives and methods of the study

Based on the theories from Strategic Management subjects that will be applied in

practice to analyze and evaluate internal and external factors and competitive

environment among the peers, our group formulated the business strategy as well as

measures to implement the strategy for the company during the period from 2012 to

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2016 with the expectation it will be a useful reference document for AVF in

formulating it’s business strategy in coming years

- Research Methods:

We use two methods of qualitative and quantitative, based on internal documents,

financial statements provided by the AVF, market research, forecast of fishery

development potential by experts as well as local and foreign organizations For this

report, we also use the documents from websites publishing by General Statistics

Office, General Administration of Customs, and Seafood Association of

Vietnamese

- The structure of this thesis includes 03 chapters

 Chapter 1: An overview of theories related to strategic management

 Chapter 2: Business situation of Viet An Joint Stock Company (AVF)

 Chapter 3: Strategic business formulation for AVF 2012 to 2016

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CHAPTER 1: OVERVIEW OF THEORIES RELATED TO

STRATEGIC MANAGEMENT

1.1 An overview of strategic management theory

1.1.1 The concept of strategic management

Strategic management is concerned with providing a purpose in order to establish

the way forward for the organization It involves creating a sustainable competitive

advantage for the organization

1.1.2 Classification strategy

1.1.2.1 Classification of specific strategies

According to Fred R.David, it is possible to divide strategies into 14 types of typical

strategies and 04 groups as follows:

 Integration strategy group

- Forward integration: this type is related to the increase of ownership or control

to distributors or retailers An effective method to implement this combination

strategy is transfer of right The enterprises can develop rapidly through transfer

of right since the cost and opportunity are divided to many individuals;

- Backward integration: this type is related to the search for ownership or control

of company’s suppliers This strategy is especially suitable when the current

suppliers of the company are not reliable, expensive or fail to satisfy the

requirements of the Company;

- Horizontal integration: this strategy is related to the discovery of ownership or

control to rivals The merging, acquisition helps to improve the effectiveness of

the scope, and increase the exchange of resources and capacity

 Intensive strategy group

- Market Penetration refers to the search for additional market shares for current

products and services in the existing markets through marketing efforts Market

penetration includes the increase of sales staff, advertisement cost, production

products or advertisement efforts;

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- Market Development refers to the launching of existing products and services to

new sectors;

- Product Development refers to the increase of turnover by the improvement or

adjustment of existing products or services Product development requires high

research and development cost

 Expansion strategy Group

- Diversification of concentric activities means the addition of new but interacted

products or services;

- Diversification of activities in horizontal manner means the addition of new

products and services those have not relation for existing customers;

- Diversification of activities in combined manner means the addition of new

products or services without interaction

 Other Strategy Group

- Joint venture: two or more companies form an independent company for

cooperative purposes;

- Operation contraction refers to the consolidation through cost and property cut to

save the dropping revenue and profit;

- Activity cut-down refers to the selling of a branch or a part of the company;

- Liquidation means the selling of all the properties, partially, with tangible

values;

- Combination pursues two or many strategies at the same time

1.1.2.2 Michael Porter 's perspective on the typical strategy

According to Porter, typical strategies enable company to get competitive

advantages from three different aspects:

- Cost strategy refers to the manufacturing of standardized products at low unit

price for price-sensitive customers;

- Differentiation refers to the strategy aiming at the production of service

products considered as specific in the sector for customers those are not

sensitive to the price;

- Focus on the main point refers to the production of products and services to

meet the demands of small groups of customers;

One reason for pursuing forward strategy, backward strategy or horizontal strategy

is to gain the benefits of price orientation

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Product development is a typical strategy with many advantages for the product

distinction (differentiation strategy) The successful product distinction means the

higher product flexibility, greater combination ability, lower cost, improved

services, fewer maintenance, more comfortableness, or more specific traits

The strategies such as market penetration, market development provide much

advantage

1.1.3 Process of Strategic management

Figure 1.1: The process of strategic management

1.1.3.1 Strategy formulation

Feedback information

Thiết lập mục tiêu dài hạn

Lựa chọn các chiến lược để theo đuổi

Xét lại mục tiêu kinh doanh

Thực hiện kiểm soát nội

bộ để nhận diện những điểm mạnh yếu

Phân phối các nguồn tài nguyên

Đo lường

và đánh giá thành tích

Thiết lập những mục tiêu hàng năm

Đề ra các chính sách

Thông tin phản hồi

Feedback

Establish term objectives

long-Select the strategies to pursue

to identify the main opportunities and threats

Review business objective

Implement internal control to identify the strength and weakness

Distribute natural resources

Measure and evaluate achievement

s

Establish annual objectives

Propose policies

Feedback Strategy

development

Strategy implementation

Strategy evaluation

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Strategy formulation is a process that includes defining the tasks, the current

strategic objectives, analyzing the context of the internal & external elements of the

business and then making plan a strategy for the company appropriate to the context

analyzed The result of this process will show the company decided to participate/

not participate in the field of business/geographical area, how to allocate their

resources; should extend/ shrink operation; associated or not associated with a

partner ?

1.1.3.1.1 Identify strategic objectives

Identifying strategic objectives is to analyze and point out the mission - the vision

and long-term goal of offering the business To build strategic objectives and tasks

of the planners of the business strategy must answer the question: Our enterprise

operate in what, our business bring and benefits to whom, how we can satisfy the

interests of the people involved and what we will become in the future These issues

are critical and considered as guidlines for all activities of the business in the future

1.1.3.1.2 Analysis of external environment

Analyzing the external environment is to focus on the identification and evaluation

of external factors to find out what opportunities and threats from these factors to

the operation of the business in order to devise appropriate strategies for the

enterprise to respond to the changes of these factors The analysis of the external

environment can be done by analyzing the macro environment and industry

environment

 Macro environment analysis

The changes in the macro environment possibly impact on any certain forces in

the industry and alter the attractiveness of an industry Macro environment

consists of 6 segments: economy, social culture, demography, political law,

technology and global

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Figure 1.2: Factors affecting the macro environment

 Analyzing the industry environment (micro-environment)

According to Michael Porter , there are five competitive forces oriented within

the sector are: (1 ) the risk of entry of new companies , (2 ) the degree of

competition among existing companies in the industry , (3) bargaining power of

buyers , (4) bargaining power of sellers ; (5) threat of substitutes

Figure 1.3: Model of five competitive forces M Porter

 Competitive pressures of the suppliers with the basic elements:

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 The quantity and scale of suppliers;

 Product substituting ability of suppliers;

 Information about suppliers

 Competitive pressure from customers

Customers are classified into 2 groups as other retail and distributors Both

groups put pressure on companies on price, product quality and service come

and it is they who control the industry through competition in the purchase

decision

 Competitive pressure from potential rivals

According to M-Porter, the implicit rivals of the enterprises have not appeared in

the sector market but can influence the sector in the future

 Competitive pressure from substitute products

Substitute products and services refer to those can satisfy the similar demand of

customers for products and services in the sector

 Competitive pressures of the industry internal

The enterprises in the sector will compete directly with each other to create the

pressure on the sector and form the competition intensity Following factors of

the sector will increase pressure on the rivals:

 Sector situation;

 Sector structure

1.1.3.1.3 Analysis of internal company environment

This is a process of evaluation of all the main functional operations of a company

such as administration activity, marketing, finance – accounting, product research

and development, etc… in comparison to the peers of the company The purpose of

that is finding out the strengths and weaknesses of the company in combination with

the results of external analysis to formulate business strategy for the company

1.1.3.1.4 Strategy formulation and selection

In regarding to build up long term objectives of the company, formulate transferable

strategies, and pick up the reasonable business strategies to follow All the process

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is implemented with the tools of analysis, evaluation and selection and the point of

views of strategy maker included

1.1.3.2 Strategy implementation

The process of specifying the selected strategies, defining appropriate policies for

strategies implementation, allocating all necessary resources to ensure that strategic

objectives are achieved

1.1.3.3 Evaluation and adjustment of strategy

In fact business environment is always changing; our forecast of internal and

external factors impacting on the process of formulation strategy is possibly not

accurate Accordingly, Once the selected strategies are implemented, the

performance of that should be measured and evaluated In needed the strategy

adjustment must be done in the way that fit to the changes in business environment

1.1.4 Tools for strategy formulation and selection

According to Fred R David, the strategy formation includes 3 stages including

penetration, combination and decision:

Boston consulting group (BCG)

Internal – External matrix (IE)

Grand strategy matrix

Stage 3: Decision

Quantitative strategy planning matrix (QSPM)

Table 1.1: Process of strategy FOemulation

1.1.4.1 Internal factor evaluation Matrix (IFE)

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External Factor Evaluation enables strategists to summarize and evaluate economic,

cultural, social, demographic, geological, political, government, technological and

competing information

1.1.4.2 External factor evaluation Matrix (EFE)

External factor evaluation Matrix (EFE) allow summarizing and evaluating of

economic information, social, cultural, demographic, take reasonable, politics,

government, law, technology and competition, how to impact to business, aims to

establish the appropriate business strategy for enterprise

1.1.4.3 Internal - External Matrix (IE)

IE Matrix (Internal – External Matrix) set the difference SBU (Strategic Business

Unit) of company into the table with 9 cells IE Matrix is based on two main aspects

as follows:

- Total significant scores of IFE matrix is shown on the X axis , and

- Total significant scores of EFE matrix is shown on the Y axis

Each SBU must to establish IFE and EFE matrix, thereby setting IE matrix of the

business On the X axis of the matrix IE, showing the total number of critical points

IFE matrix Similarly, on the Y axis of the matrix IE, showing the total number of

critical points of the matrix EFE:

Medium 2,0 – 2,99

Low 1,0 – 1,99 Strong

Table 1.2 : Internal – External Matrix

Based on IE Matrix, we can be divided into three major sections; each section

includes the following different strategies:

- SBU located in the cells I, II and IV that suggests the grow and build strategy

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- SBU located in the boxes III, V and VII, that suggests hold and maintain

strategy, market penetration and product development are two appropriate

strategies in this case

- SBU located in cells VI , VIII and IX: suggested strategies are harvest and

divest

1.1.4.4 Competitive image Matrix

Competitive image matrix helps a company to identify the competitors, and their

strengths, and weakness in comparison with its self in the process of strategy

formulation

Strategy 1 Strategy 2 Strategy 3

Rating Score Rating Score Rating Score

List the

factors

Total scores

Table 1.3: Competitive Image Matrix

1.1.4.5 Strengths - Weaknesses - Opportunities – Threats Matrix (SWOT)

SWOT Matrix is a tool that combines the strengths (S), weaknesses (W),

Opportunities (O) and threats (T) to give the following four strategic:

List all Threats Combination of S-T Combination of W-T

Table 1.4: SWOT Matrix

1.1.4.6 Strategic position and action evaluation Matrix (SPACE)

Strategy position and action evaluation matrix is used to evaluate the operation of

the business, and determine the location of the business in the market The axis of

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this matrix represents the two aspects within the organization: financial strength

(FS) and competitive advantage (CA) and two outside business aspects:

environmental stability (ES) and strength of the sector (IS)

1.1.4.7 Quantitative strategic planning matrix (QSPM)

QSPM aims at evaluating and ranking of strategic options that help to select the

most reasonable strategies for the enterprise QSPM uses the outputs in relation to

each other from EFE matrix, Competitive image matrix, IFE matrix, SWOT matrix,

Space matrix, IE matrix This is the tool to carry out objective evaluation of

alternative strategies, which is firstly based on the internal and external factors to

success

1.2 Overview of pangasius processing and exporting in Viet Nam:

Vietnam is considered as one of nations having the fastest fishery export growth in

the world, with an average growth rate of the period 2001- 2010 was 15%

According to FAO, Vietnam was ranked the fifth in the list of the seafood exporter

in the world and was the third on aquaculture production Fishery is one of the key

export sectors of Vietnam, contributing 3.5% to 4% GDP, next only to crude oil,

coal, textiles, reached 3.74% GDP in 2010

The revenue of exported seafood of Vietnam in 2011 reached 6.1 billion USD, up to

21% compared with that of 2010 and more three times than 2002 In which the

value of exported pangasius reached 1.805 billion USD, increased nearly 26.5% and

With export volume of over 600,000 tons

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Figure 1.4 - Structure of production of aquatic products for export in 2011

According to VASEP, currently there are more than 200 enterprises engaged in

processing and exporting pangasius However, 10 leading enterprises in Vietnam

has occupied 40% of the total seafood export value in which Vinh Hoan Seafood

Joint stock company accounts for 8%, Hung Vuong Seafood Company is over 7.2%,

AGF is about 4.55%, AVF is 4.13% and other companies are from 2.2% to 2.8%

Most of these companies have their own aquaculture areas and factories in the

Mekong Delta Besides focusing and concerned in quality of product, process from

aquaculture to processing and packaging to meet the stern requirements of strict

markets of the US and Europe, they also have paid attention to quality control in

response to non-tariff barriers from the market However, among 200 enterprises

engaged in processing and exporting seafood, there are over 100 enterprises operate

with capacity from 40% to 50% of the design capacity The main reason stems from

unstable input resources and strong increase in input price that make them difficult

for manufacturing In addition to the weak financial capacity, inadequate working

capital for production has led them to much more using borrowing capital from

credit institution causing their high risk of finance

Exported seafood structure in 2011

(GT)

Mollusc 10,0%

Other crustaceans

1,8%

Shrimp 39,8%

Catfish 30,0%

Tunny 6,3%

Others 12,1%

Source: Pangasius-vietnam.com

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Major products of most Vietnam pangasius export companies are fillets with various

types These companies still haven’t had the differentiation in their products, even

for some leading firms such as HVG, AGF However, in recent years, some

companies have initially implemented product diversification by producing

value-added products such as rolled fillets, breaded pangasius slice, skewered fish But

the contributions to revenue and profit from the products are still low

Table 1.5 - Statistical pangasius export value in markets 2009-2011

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Table 1.6 - Top 20 importing markets in 2011 in term of growth

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Table 1.7 - Top 20 importers of pangasius in 2011

No Markets Value (USD) Proportion (%)

For importing markets, The EU is the largest importer of pangasius of Vietnam

However, the value of pangasius exports to this market is saturated In 2011, the

value of exports to this market virtually increased in comparison to that of 2010,

reached nearly 514 million USD The US market is the next, value export to this

market was up to nearly 332 million USD in 2011, with growth of over 88% yoy

We suppose that in the near future, the US will remain the potential for pangasius

exporter of Viet Nam's

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In an effort to diversify in order to limit risks from the EU and US markets,

recently, the exporters in Vietnam have made their efforts to develop importing

markets, especially South America markets such as Brazil, Mexico In 2011, the

value of exports to the two markets were 84 million USD and 109 million USD

respectively According to experts, these markets will be considered as the potential

of pangasius processing and exporting in Viet Nam in the future

Production and export value of pangasius have had significant growth over the

years, with growth in the period from 2006 – 2010 were respectively of 14% and

15% Due to the forecast of experts, fishery industry in general and pangasius

processing and exporting will remain the development potential in coming years

with some reasons as followings:

• The worldwide demand for seafood consumption is expected to continue

increasing It is stemmed from decrease in substitute’s resources supply caused

by the disease of poultry and cattle, particularly tendency of fishing limitation to

protect the ecological environment of countries all over the world

 The Government is continuing to offer preferential policies for developing

fishery industry The activeness of the marine associations such as VASEP,

Vietnam Pangasius Association will support enterprises, especially give the

options to promote cooperation among enterprises to limit the competitive price

as before

 The economic growth in new developed countries like China and India will

increase long-term demand for seafood products in general and pangasius in

particular

 Vietnam’s pangasius products haven’t been diversified, great demand of value

added products in the global market are not met that will bring in many

opportunities for fishery companies in the future

Besides the opportunities, the companies of Vietnam have continued to face

enormous challenges from many different causes:

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 In recent years, the very fast growth of the fishery industry, the lack of

aquaculture planning have poisoned the ecological environment These facts

have been negatively impacting on the fishery development of Vietnam

 The increase in the price of raw materials, borrowing cost, financial difficulties,

limit of loans from banks… have pushed many families feeding pangasius into

giving up their business Accordingly the competition among the peers in

acquiring the inputs for their production likely make the price increase

 The unstable status of labor forces has badly affected the activities of fishery

processing companies

 The increase in the market barriers such as anti-dumping tax, technical barriers,

sanitary and food safety, especially policies to protect the ecological

environment throughout the world are commonly applied that will make many

challenges for exporters of Vietnam

 The risks from the importing markets: Recently, the pangasius exported to EU

and US has accounted for about 48% of that of Vietnam in term of value as well

as quantity However, the governments of these countries often issue new

barriers to limit the import of fishery products in general and pangasius products

in particular from Vietnam Therefore, all exporters of the markets are always in

the state to deal with these risks

From the above analysis, it shows that in the coming years, processing and

exporting pangasius products will have much potential to develop However, the

companies in this field will continue to face many risks from many factors

Therefore, to succeed, it is required all the companies must have appropriate

strategies to capture new opportunities as well as to cope with negative

influences arising from their business activities

1.3 The necessary of planning strategy for the Company

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Viet An Joint Stock Company (AVF) is one of the 04 leading pangasius exporters in

Vietnam Its export value accounts for over 4% of export value of the national

pangasius export value

As many companies operating in fishery, in addition to the impact of the internal

factors, AVF has been also facing the opportunities and challenges under the

influence of macro factors, the weaknesses from the marine products industry in

general and pangasius in particular

So, to cope with changes from markets, to promote the strengths as well as to limit

weaknesses to increase the business efficiency in the coming years, formulating the

business strategy is essential It allows orienting enterprises as well as giving clear

solutions so as to make companies develop sustainably

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CHAPTER 2: BUSINESS SITUATION OF ANVIFISH

2.1 Overview of Enterprise

 Company name: Anvifish Joint-Stock Company

 Abbreviated: Anvifish Co

 Logo :

 Address: National Road 91, Thanh An Village, My Thoi Ward, Long Xuyen

City, An Giang Province

 Tel: (0763) 932 545 - Fax : (0763) 932 554

 Website : www.anvifish.com - Email : info@anvifish.com.vn

 Business Registration Certificate No.: 1600720555, first registration dated

27/02/2007 issued by An Giang Department of Planning and Investment, and

the second dated 21/12/2009 and the third dated 26/08/2010

 Tax code : 1600 720 555

 Chartered capital : VND 225.000.000.000

 Scope of business: Specialized in processing and exporting frozen

aqua-cultural products The main products of the company are Pangasius section

such as pangasius fillet, pangasius fish slice, slice fillet many other kinds of

product

 Branch in HCMC:

Address: 34 Phan Dinh Giot, Ward.2, Tan Binh District, HCMC

Tel: (84-8) 3848 7358 - Fax: (84-8) 3848 7357

Main function: Marketing, widening Europe, America, Russia and Mid-West

markets It is organized with 3 functions including marketing, documentation

for export and goods delivery

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 Subsidiary Company:

ANPHA-AG is only subsidiary of the company being in charge of managing

and exploiting frozen storage system including 06 storages with capacity of

3.500 tons per storage The company has plan of raising total storage

capacity up to 40.000 tons in upcoming time

 Associated company:

Viet An associates with loyal customers in America and Europe to establish

Anvifish-Australia, Anvifish-Europe in order to penetrate these markets

2.1.1 Foundation and development

Precursor of Viet An JSC was AN GIANG – BASA Co, Ltd, established in August

2004 In Feb 2007, the company was transferred into formation of Joint Stock

Company with the name of Viet An Joint – Stock Company

After 7 years operation and development, the company has been defining its

position on the export market and becoming one of the biggest companies in Viet

Nam in the field of exporting frozen aqua – culture products Its proportion of

exported pangasius value has been accounting for more than 4% of Vietnam

pangasius export with annual revenue estimated at USD 60 million and 25.000 tons

in term of volume

 Some highlight achievements of AVF

 In 2008, AVF was imposed anti-dumping duty of 0% on American market while

many other fishery companies had to bear the rate of 63.88%

 AVF has distribution networks with more than 100 big clients, especially some

of them own supermarket and agency system in Europe and America

 AVF is one of the biggest enterprises in Viet Nam in the field of proccessing and

exporting Pangasius, it has 02 factories with total capacity of 250 tons/day and

aqua-culture areas of 123 hectares (01 area of AVF and 05 associated areas)

Recently, AVF has invested in new area of 100 hectares in order to be active in

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input materials Beside, AVF has completed a system of frozen storage of

capacity of 20.000 tons at Long Hau Industrial Park

 The company has increasingly developed, with revenue of USD 32 million from

2007 up to USD 62 million in 2010, growing to 100% after 4 years

 During the time of operation, AVF has gained many certificates and merits from

the governments, associations and organizations:

Table 2.1: List of some certificates and awards of AVF

No Certificates and Merits Issued date Issued place

1 ISO golden cup in 2007 04/09/2007 Ministry of Science

4 Vietnamese Typical Business Person

Business Person cultural center

5 Gold award for safe food brand 21/05/2008 Viet foods Safety

Network

6 Top 100 trusted brand 2008 15/08/2008 VN Enterprise

7 Certificate of trustful supplier in Viet

Nam

VN Enterprise

8 Contribution to program of “Looking

forward beloved countryside” in 2007

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11

Certificate for achievement of

social-economic development in An Giang in

2007

01/02/2008 An Giang People’s

Committee

12 Certificate of prestigious export

enterprise in Viet Nam in 2007

14 Certificate of prestigious export

enterprise in Viet Nam in 2008

16/04/2009 Ministry of Trade

and Industry

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2.1.2 Organizational structure and Management

Figure 2.1: Organizational structure and management of AVF

Vice General Director of Materials

Vice General Director of producing Inspection Commitee

Dept

of IT

Dept

of Techni

que

Dept

of Constr uction

HR F&A Materi

al area Dept

QC Center

Dept

of produc ing control

Dept of quality maneg

Dept

of planni

ng

Wareh ouse

An Thinh

factory

Viet Thang factory

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- General Meeting of Shareholder (GMS) is the most powerful one of Viet An

JSC; GMS has the rights of highest decision making authority of the company

- Board of Management is voted by General Meeting of Shareholders, is

responsible for implementation related matters set in resolution of General

Meeting of Shareholders as well as The charter of the company

- Inspection Committee is voted by General Meeting of Shareholders, is

responsible for monitoring, supervising Board of Directors’ as well as

company’s business activities in order to ensure benefits for all shareholders

- Board of Directors includes General Director and 04 Vice General Directors

who are under duty of operating daily company’s activities as well as

implementing company’s strategies

- Dept of IT is responsible for managing and maintaining the system of

Company’s IT such as office equipments, softwares and company’s website

- Dept of technique concerns about periodic maintenance (monthly, quarterly,

and annual) equipments, electric devices…to ensure smoothly operation of those

ones This Dept also takes care of changing, installing new machines and

equipments along Projects as well as filling technical guide

- Dept of Construction is responsible for managing, repairing and constructing

new fix assets of the company

- Dept of Admin and HR is responsible for HR matters like labour, insurance,

fire fighting, work safety, hygiene…and other tasks of admin such as manage

files and other missions relate to other Dept(s)

- F & A is in charge of planning and mobilizing financial resource for AVF as

well as collection, processing, examination, analysis and supply of financial

information according to the requirements of the Board of Directors and other

relevant subjects and have responsibilities of making financial statement, and

also internally auditing operation of the company

- Quality control center of aquatic: precursor is laboratory with its major

functions are to ensure food hygiene for material of fish, standardize

measurement tools and devices under criteria of trustful, objective, and honest

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Technical management activities of Laboratory are ruled in ISO/IEC

17025:2005

- Dept of planning cares about annual plans, produces as orders, co-ordinates

with F & A to form prices, co-ordinates with factories of production schedule

and economic norms, forms and supervises investment projects along producing

needs, supplies safety clothing, tool, chemical, manages material storage, checks

and reports plan condition

- Quality Control Dept: checks whether factories follow quality requirements or

not and ensures quality of products at each stage of producing

- Material management area Center: ensure to supply standard fish with right

quantity and suitable price, deliver on time, maintain good relationship with

suppliers, ensure long term competitive position for the company, look for and

develop material resources

- Producing control Dept: manages producing activities of the company, is

responsible for managing warehouse, An Thinh and Viet Thang Factories

2.1.3 Main business activities of AVF

AVF is specialized in processing and exporting frozen aqua-culture products such

as pangasius in fillet, pieces, of which pangasius fillet account for 90% annual

revenue of the company Pangasius fillet products are diversified and classified

following different standards (color, size, weight…) depend on customer and export

market’s requests Waste products from processing such as head, fat, bone, skin…

are sold directly to feed processing companies for their production inputs

Table 2.2: Sales of AVF from 2008 to 2011

Ton for quantity and 1.000 USD for value

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Figure 2.2: Some main products of Anvifish

Pangasius fillet T1

 Product: Well – Trimmed

 Latin name: Pangasius

 Product : Half - Trimmed

 Latin name : Pangasius

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2.1.4 Technology Capacity

 Producing capacity

- An Thinh Factory owns capacity of 100 tons of raw fish/day, frozen system of

04 rapid freezing conveyers of IQF 500kgs/h, 04 frozen boxes of 2.000 kgs/h/1

- Viet Thang Factory owns capacity of 150 tons of raw fish/day, frozen system

of 04 rapid freezing conveyers of IQF 500kgs/h, 06 frozen boxes of 2.000

kgs/h/1

- Warehouse with capacity of 3.500 tons of products

The company has invested in advanced production line such as: rapid freezing

conveyers and boxes, compressors (Mycom-Japan), grading machines (Denmark)

and some other accessories (Europe)

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 Manufacturing process of frozen pangasius fillet in block/IQF

Figure 2.3: Manufacturing process of frozen pangasius fillet in block/IQF

Freeze IQF

Freeze block

Receiving materials

Cutting fauces Fillet Washing 1 Slicing skin

Repairing fish

Checking fish

Checking parasite*

Washing 2 Supportive substance

Grading

Weigh

Putting into moulds

Waiting for frozen

Rapid freezing

Weigh,

Rapid freezing Splitting moulds Pouring into PE, Closing

Packing, labeling

Preserving

Distributing

CCP B2 CCP C1

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1 Rate of increasing revenues

on sales and services supply

(%)

2 Rate of increasing gross

profits on sales and services

supply (%)

3 Rate of increasing gross

profits on business activities

(%)

4 Rate of increasing net profit

after corporate income

tax (%)

(Source: AVF)

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Table 2.5 - AVF’s Expense/net revenue changes over years

Cost of goods sold /Net revenue 83.8% 81.7% 81.1% 80.3% 82.8%

Gross profit/ Net revenue 16.2% 18.3% 18.9% 19.7% 17.2%

Financial profit/ Net revenue -3.5% -5.4% -2.4% -4.6% -3.4%

Selling expense / Net revenue 6.9% 10.6% 8.0% 7.2% 7.3%

Administrative expense/ Net revenue 2.4% 1.3% 1.7% 2.1% 1.9%

Net profit / Net revenue

3.3% 0.8% 6.8% 5.7% 4.8%

(Source: AVF)

In general, AVF’s business result during period of 2008-2011 was fairly good;

although seafood export companies faced to many difficulties in output market and

income materials, AVF’s revenue still reached growth rate of 2 numbers or more

than 34%

Growth of net profit growth during this period was very high, nearly 45% However,

in recent years, it has signaled the decrease with the pace of 2011 was only 4.8%

caused by increase in cost of goods sold Even so that would be encouraged in the

the condition of strongly increasing price of inputs in this year

Cost of goods sold: in order to reach the above achievement, AVF was active in

controlling price, quality and income materials, improving capacity of factories and

applying advanced production procedures…then decreasing rate of cost/net revenue

This rate was decreased from 86% in 2006 to 82.8% in 2011 On the other hand,

gross profit rate in 2006 was increased from 14% to 17.2% in 2011, higher than

average number of the same companies (about 15%) and AVF is at the top group of

companies which have the highest gross profit rate

Other expenses: AVF has well-controlled operation expenses such as selling,

administrative expenses Selling expense/net revenue was decreased from 10.6% in

2009 to 7.3% in 2011 Administrative expense/net revenue was from 1.7% - 2.1%

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in the period 2009 – 2011 and downed from 2.1% in 2010 to 1.9% in 2011 that

showed the efforts of the company in managing and controlling these kinds of

expense

2.1.5.2 The situation of product export and distribution

Table 2.6 – export sales in markets

Unit: ton for quantity, $ 1000 for value

No Market

Y 2008 Y 2009 Y 2010 Y 2011 Quantity Value Quantity Value Quantity Value Quantity Value

Source: AVF

Trang 37

Recently, AVF’ products have been mainly exported to America, EU and Russia

(accounted for more than 91% and 93% respect in term of sales and volume)

 EU Market: is the traditional market of pangasius export companies in general

and AVF in particular However; this market is saturation to aqua-culture

exporting companies of Vietnam Moreover, the fierce competition of selling

price among the exporters in fishery has been hurting all participants Therefore,

AVF has restructured its markets in the way of reducing product export to this

market and focusing on America’s one This is proved by showing that, the

proportion of export revenue to EU reduced from 53% in 2008 to 29.2% in 2011

 Russian Market: in 2008, Russian’s demand pangasius increased The export

sales to this market reached nearly USD 120 million Along this trend, AVF also

focused on this market with the output was 7.100 tons, accounted for nearly

33% total export volume The competition price among exporters caused the

fraud of increasing ice-glazing rate from 20% to 30% making decrease in

product quality As a result, at the end of 2008, Russia closed market to all

fishery exporters from Vietnam and reopened in April 2009 In this year, total

revenue of pangasius export to this market of USD 64 million decreased nearly

50% in comparison to 2008 Right after the market was reopened, with the

advantage of having a position as a member of the board of exporting seafood to

Russian market; AVF took the chance to boost export to this market making

revenue up to USD 11.5 million, increase by 6% in comparison to 2008 In

recent years, AVF’s strategy for this market is restructuring products to this

market on the way of increasing deep-processing products such as catfish fillet

T1, T2 instead of exporting the whole fish, fillet T3 Looking at the Figure 2.3,

we can see that, in 2010, quantity and value proportions of export to this market

were 13.2% and 8.5% respectively and in 2011, they were 15.6% and 16.2% in

turn

 American market: it is hard to enter this market because of anti-dumping duty

tax and other regulations In 2007 and 2008, export value of AVF to this market

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was only accounted for 4% to less than 5% However, the efforts of penetration

into this market helped AVF to benefit anti-dumping duty of less than 0.52% in

2009 Because of the profitability from US market, AVF focused on exporting to

America As a result, export revenue to this market in 2009 was 6 times more

than 2008 and increased 38% YoY in 2010 and 19% YoY in 2011 According to

the result of final review on anti-damping tax in the period of August 1st 2009 to

July 31st 2010 of U.S Department of Commerce, AVF will be applied

anti-dumping duty of 0.03 USD/kg while the many rivals of AVF possibly imposed

of 2.11 USD/kg So that US market will be considered as advantageous market

of AVF in upcoming times

 Other markets: Stemming from the target of diversifying markets, AVF has

been recently implementing trade promotion activities to shift its products to

some other markets in which Australian market was the most focused market

This is approved by the revenue structure of the company in this market has

increased from 1% in 2010 to nearly 6% in 2011

2.2 Internal Environment

2.2.1 Management activities

- Board of directors

Table 2.7 - List of some members of AVF’s Board of Directors

General management 47 Civil Engineer 07 years

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AVF’s BOM includes 05 members, owns more than 30% of shares of the company

These members own education background of University and Postgraduate, many

years of managing, aquaculture, producing and exporting experiences Most of them

have worked for AVF at least 3 years, especially since 2004 (Chairman cum

General Director) They are not only AVF’s BOD members but also hold high

positions of institutions that support company’s activities In detail, Chairman –

CEO is member of BOM of seafood export companies to Russia Other member of

BOM is a big shareholder who owns 11% of the shares and simultaneously is D &

T General Director of Foods Corp – U.S and Far East Ventures LLC USA This is

one of the key advantages of AVF in exporting its products to US

Most of members in Board of Directors own education background of University

and Postgraduate, with 7 to 20 years of experiences in managing and executing in

the field of aqua-culturing, producing and exporting AVF’s BOD positions are

suitable, based on qualification and capacity of each member

We think that AVF’s BOM and BOD was the key for the company’s success; these

ones will lead AVF to plan and implement effective business strategies in future

- Organization and management structure

Organization and management structure of the company is organized in functional

mechanism It means that each Department undertakes certain functions during

business operation General Director has rights to give out strongest decisions for

raised matters in the company 4 Vice General Directors support General Director:

Vice General Director of Technique, Vice General Director of Finance, Vice

General Director of Materials, and Vice General Director of Producing Each Vice

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General Director is responsible to manage some departments and plays the role of

connecting the departments that he is in charge of

 Vice General Director of Technique undertakes activities of Dept of IT,

Technique and Construction

 Vice General Director of Finance undertakes activities of Dept of HR, F & A

 Vice General Director of Materials undertakes activities of quality control

centre and material areas

 Vice General Director of Producing undertakes activities of Dept of Planning,

Quality management and Production

Head of department is responsible for specific department operation that regulated

in the business management regulation of the company, but in some cases, the

combination among departments has been facing some difficulties due to not clearly

decentralization management This is one of the problems that AVF have to resolve

in near future

- Human Resource

Total number of employees is 2.927 in which 72 people own education background

of University and Postgraduate, mainly care about management and highly

specialized works

Frozen pangasius export companies in general and AVF in particular employ many

unskilled workers, mainly in factories, this number accounts for 93% to 96% of

total employees Having widened its scale in recent years that push AVF up into the

needs of hiring more and more workers and that is why the number of workers of

AVF has increased so fast In the end of 2009, the number of unskilled workers is

1.988, but this one increases to 2.800 as now These employees are not well

educated; therefore, it is hard and complex to manage them Therefore, AVF

occasionally faces to condition of quitting jobs of those ones However, with the

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