Business strategy of Viet Phu foods and fish corporation for the period from 2012 to 2016

LIST OF ABBREVIATIONS HACCP: Hazard Analysis and Critical Control Point System BRC: British Retailer Consortium BRC Gobal Standard for Food Safety GMP: Good Manufacturing Pratice ISO: Th

GLOBAL ADVANCED MASTER OF BUSINESS

ADMINISTRATION PRORGAM

CAPSTONE PROJECT REPORT

TOPIC:

BUSINESS STRATEGY OF VIET

PHU FOODS AND FISH CORPORATION FOR THE PERIOD

FROM 2012 TO 2016

Class: C0310 Group 9:

1 Truong Ngoc Anh Linh (Team leader)

2 Ha Trong Diep

3 Nguyen Thi Thanh Mai

4 Tran Tan Nhat

ACKNOWLEDGEMENTS

I would like to acknowledge and extend my heartfelt gratitude to the following persons who have made the completion of this research paper possible: All professors and lecturers whose encouragement, guidance and support from the initial to the final level enabled me to develop an understanding of the subject

ETC Hanoi National University for the convenience and support provided

Board of Management of Viet Phu Corporation for assisting in the collection of data and any explanation needed

Most especially to my family and friends

Lastly, I offer my regards and blessings to all of those who supported me in any respect during the completion of the research

Ho-Chi-Minh City, March 2012

Group 9- Class GaMBAC0310

LISTS OF TABLES 9

PART I: GENERAL INTRODUCTION 12

1 Reason for choosing topic: 12

2 Objectives of research and possible application 12

2.1 General objective 12

2.2 Specific objective 12

2.3 Applicability: 13

3 Research content: 13

4 Research method: 13

4.1 Data collection method: 13

4.2 Data analysis method: 13

5 Object and scale for research 14

5.1 Research object: 14

5.2 Research scale: 14

5.2.1 Space: 14

5.2.2 Time: 14

5.2.3 Content structure of this topic: including 3 chapters 14

PART II: CONTENT 16

CHAPTER I: LITERATURE REVIEW 16

1.1 The concept of strategy and strategic management 16

1.1.1 The concept of strategy: 16

1.1.2 The concept of strategic management: 16

1.2 Strategic management process: 16

1.2.1 Planning strategy stage: 17

1.2.2 Implementation stage of strategy: 18

1.2.3 Evaluation stage of strategy: 18

1.3 Business environment’s factors: 18

1.4 The tools for developing and choosing strategy: 19

1.4.1 Internal Factor Evaluation (IFE): 19

1.4.2 External Factor Evaluation (EFE): 20

1.4.3 Competitive Profile matrix: 20

1.4.4 SWOT matrix: 21

1.4.5 Strategic Position & Action Evaluation (SPACE) 22

1.4.6 Quantitative Strategic Planning Matrix (QSPM): 23

1.5 The role of strategic management for the development of business 23

1.6 Model of 5 competitive pressures by Michael Porter 24

1.6.1 Supplier’s competitive pressure: 24

1.6.2 Customer’s competitive pressure: 24

1.6.3 Competitive pressure from potential competitors: 25

1.6.4 Competitive pressure from substitute products: 26

1.6.5 Competitive pressure from internal industry: 26

CHAPTER 2: OVERVIEW AND SITUATION ANALYSIS OF VIET PHU FOODS AND FISH CORPORATION 28

2.1 Overview of fishery, difficulties and challenges: 28

2.2 Overview of VIET PHU FOODS AND FISH CORPORATION 31

2.2.1 History and development of the Company 31

2.2.2 Major business lines: 32

2.2.3 Structure 33

2.2.4 Tasks - functions of the division department 33

2.4 Analysis – limitations, existence of Vie Phu Corp in the period of 2007- 2011 38

2.4.1 Analysis of internal factors 38

2.4.1.1 Administration 38

2.4.1.2 Functions of human resource 39

2.4.1.3 Production activities - Operation 41

2.4.1.4 Marketing activities 43

2.4.1.5 Financial activities – Accounting 44

2.4.1.6 Research activities and development 46

2.4.2.1 Economic factors 46

2.4.2.2 Elements of law, government and politics 48

2.4.2.3 Cultural factors - social – demographic 49

2.4.2.4 Scientific factors – technology 50

2.4.2.5 Natural factors 50

2.4.2.6 Environmental industries 51

a) The pressure from competitors 51

b) Competitive pressure from customers 53

c) Pressure from suppliers 54

d) Hidden new competitors 55

e) Pressure from substitute products 57

CHAPTER III: BUSINESS DEVELOPMENT STRATEGY OF VIET PHU FOODS & FISH CORPORATION 62

3.1 Objectives of in the Company for the period from 2012 to 2016 62

3.1.1 Definition of objectives: 62

3.1.2 Objectives of the Company 63

3.2 Application of strategic planning matrices of the Company 64

3.2.1 External Factor Evaluation (EFE) 64

3.2.2 Internal Factor Evaluation (IFE) 65

3.2.3 Competitive profile Matrix (CPM): 66

3.2.4 SWOT analysis matrix 66

3.2.4.1 Group S-O strategy: 69

3.2.4.2 Group S-T strategy: 69

3.2.4.3 Group W-O strategy: 69

3.2.4.4 Group W-T strategy: 69

3.2.5 Strategic Position & Action Evalution (SPACE) 69

3.2.6 Quantitative Strategic Planning Matrix (QSPM) 71

3.2.6.1 QSPM Matrix group S-O 71

3.2.6.2 QSPM Matrix group W-O 72

3.2.6.3 QSPM Matrix group S-T 73

3.2.6.4 QSPM Matrix group W-T 75

3.2.7 Strategic choices consistent with the operational objectives of Viet Phu to

2016 76

3.3 Recommendations for the Company to implement of the selected strategies 76 3.3.1 Marketing strategies 76

3.3.1.1 Product 76

3.3.1.2 Price 77

3.3.1.3 Place 78

3.3.1.4 Promotion 78

3.3.2 Production strategy 79

3.3.2.1 Concentrate on profitable commodities 79

3.3.2.2 Stability of raw material supplies 79

3.3.2.3 Reduction of production costs 80

3.3.2.4 Improvement of production technology 82

3.3.2.5 Enhance quality control 82

3.3.3 Financial strategies 83

3.4 For the Vietnamese Government and other related organisations 84

CONCLUSION 86

REFERENCES 88

APPENDICES 89

LISTS OF TABLES

Table 2-3: Tra and Basa pricefluctuate from 2009 to 2011 53

Table 3-1: Viet Phu’s External Factor Evaluation matrix 63 Table 3-2: Viet Phu’s Internal Factor Evaluation Matrix 64 Table 3-3: Viet Phu’s Competitive Profile Matrix 65

Table 3-10: COMPARISON OF FISH AQUACULTURE EXPENSES 79 Table 3-11: Forecast for the period from 2012 to 2016 83

LISTS OF FIGURES

Figure 2-1: Main Markets of sea products in 2011 26 Figure 2-2: Main products of aquatic industry in 2011 27 Figure 2-3: Perforamnce of Viet Phu in the period of 2007-2011 36

Figure 2-5: Fish-export market share of the businesses in 2011 51 Figure 2-6: Export value of catfishes in 2007-2011 56

LIST OF ABBREVIATIONS

HACCP: Hazard Analysis and Critical Control Point System

BRC: British Retailer Consortium (BRC Gobal Standard for Food Safety) GMP: Good Manufacturing Pratice

ISO: The International Organization for Standardization

Global GAP: Global Good Agricultural Practices

VASEP: The Vietnam Association of Seafood Exporters and Producers

WTO: World Trade Organization

EU: European Union

DOC: United States Department Of Commerce

IFE: Internal Factor Evaluation

EFE: External Factor Evaluation

SWOT: Strengths, Weaknesses, Opportunities and Threats

SPACE Strategic Position & ACtion Evalution

BCG Boston Consulting Group Matrix

QSPM: Quantitative Strategic Planning Matrix

CPM: Competitive Profile Matrix

GDP: Gross Domestic Product

VND: Vietnam Dong

USD: United States Dollar

WWF: World Wide Fund

ASC: Aquaculture Stewardship Council

PART I: GENERAL INTRODUCTION

1 Reason for choosing topic:

Fisheries industry is one of the key sectors in the industrialization and

modernization of Vietnam which has a number of competitive advantages to be

developed including abundant resources, cheap labor cost and preferential encouraging policies of the Government The continuously significant growth of the Vietnamese seafood industry for years, especially the current exported achievement

in 2011 of US$6.1 billion which was triple increased over 10 years of development, provides the strong evidence for its bright future prospects However, while the high world demand gives great opportunities and a large playing field for all, the trade barriers, harsh competition and a number of problems and challenges are always big concerns for all Vietnamese seafood exporters, especially for small and medium size companies with limited resources As a result, determining right developing strategies to pursue becomes so vital and inevitable for Vietnamese seafood exporters in surviving, developing and determining their position in domestic and international markets For that reason, this study aims to critically assess and deeply analyse the current operation of Viet Phu Food Fish Corporation (“the Company”)

to identify its current achievements and difficulties facing the Company then recommend practical and effective business strategies that the Company should implement to improve and enhance its current position for the period from 2012 to

- Learning about company’s general circumstance:

Carrying out analysis of revenues, expenses, profits, the business performance indicators and financial ratios of the company over 05 years (2007-2011) to evaluate company’s business results and evaluate overview of Vietnam aquatic product sector

- Analyzing factors which affects company’s business operation

- Giving the solutions to overcome difficulties, to promote the advantages of the company and to develop business strategies for company

2.3 Applicability:

Developing business strategy to help companies assess itself the strengths, weaknesses to fix and improve Additionally it can help the company to prove all potentiality and to exploit all resources to achieve the highest efficiency in business Besides, the act of company’s building business strategy can prevent and limit the risks of business which can also predict business conditions in the near future

3 Research content:

Generally introduce about the process of company’s development, organizational structure and business situation in recent years Then carry out the analysis of internal factors to draw strengths and weaknesses of the company, the micro and macro of factors impact on industry and company to realize the opportunities which company can make use of and should be avoided From them, building the business strategy can be applied to the Company

4 Research method:

4.1 Data collection method:

- Directly collect data from Viet Phu

- Consult data from books, websites and the knowledge have learned

4.2 Data analysis method:

*Comparative method:

Using this method to compare and evaluate data analysis and be mainly used

to serve in the analysis of financial ratios From the collected data, the team draws a comparison between the years and this method clearly shows the change in company’s capability and business situation over the reporting period

*Ratio method:

Ratio method is used to show that the change percentage’s rate of this period compared to the previous period or original period, reflecting the growth or stagnation in business Generally this method is used to combine with the comparative method Sometimes it’s also known as the relative method This is a fairly simple method to analyze the changes on company’s financial situation objectively

5 Object and scale for research

5.1 Research object:

Because of limited ability, our group just focuses on factors’ study which affects the production and business ability of the company, and through them we build business strategy for the company When analyzing company’s financial status and performance, our group primarily based on the analysis of financial ratio, balance sheet, statement of business results, employment interview, reference books, essays of aquatic product industry and enterprises in same business

- Chapter 1: Literature review

- Chapter 2: Overview and situation analysis of Viet Phu Foods and Fish Corporation

- Chapter 3: Strategy and solution planning

PART II: CONTENT

CHAPTER I: LITERATURE REVIEW

1.1 The concept of strategy and strategic management

1.1.1 The concept of strategy:

The strategy is a set of goals and policies as well as main plans to achieve these goals It clearly shows that what the company is or will perform which business activities

With a company, a strategy is like a decisions system to establish the goals or milestones that company must do It sets out the policy and plan to implement objectives It identifies business form and ideas of the Company, nature of the economic contributions and outside the scope of economy which company can do because of company’s employee and society

1.1.2 The concept of strategic management:

Strategic management is the process of researching present environment as well as future; planning objectives of the organization; carrying out to implement and to supervise the implementation of decisions for achieving objectives in present and future environment

1.2 Strategic management process:

Strategic management process includes three stages: planning strategy, implementing strategy and evaluating strategy

(Source: Fredr David – Outline of strategic administration)

Figure: Overall strategic administration

1.2.1 Planning strategy stage:

Strategic planning is the process of establishing and developing business tasks, carrying out investigation and research to identify opportunities and threats to the organization from outside, showing the inside of strengths and weaknesses, setting long-term objectives, creating and selecting alternative strategies and specific strategies to pursue

Three basic operations in strategic planning are to do research, to be in harmony with the intuitive analysis and to draw conclusions

Doing research associated with collecting and processing information about the external –internal environment and current internal strength of organization After synthesizing the information gathered, we will rely on to assess, to arrange

ơ Allocate resourc

es

Redetermine business goals

Analyze internal goals Identify the strengths and weaknesses

ơ Select appropri ate strategy

ơ Adopt policy

Formation of strategy Implementation Quality evalua

Measure and evaluate the implement ation of the strategy

ơ Set out long term goals

ơ Set out annual goals

and to combine these threats and important opportunities of the outside with the strengths and weaknesses within the organization to carry out possible strategies for the organization a complete strategy

1.2.2 Implementation stage of strategy:

Implementation of strategy is a critical and difficult stage in the process of implementing strategic management

This is the action stage of strategic management Implementation stage of strategy requires organizations to set short term objectives, bringing out policies and allocation of resources, changing the current organizational structure

1.2.3 Evaluation stage of strategy:

This is the final stage of the strategic management Strategic evaluation is the process of reviewing the basis and objectives for the current strategy, monitoring the results of established operation and implementing strategy, comparing achieved results with targets and determining the cause of deviations and making corrective action

Evaluation process is necessary because a successful strategy can bring long term benefits and significant or in the contrast it can bring a serious disadvantage

The timely assessment can help organizations to identify gaps or mistakes in the implementation and finish process Thereby, the organization can exactly know their strategy’s effectiveness and accumulate the necessary experience

1.3 Business environment’s factors:

The analysis of business environment’s factors is very important because we can determine the basis for developing strategies and these factors have great influence on all subsequent steps of the process of implementing the strategy

The business environment is divided into three levels: internal environment, macro environment (industry environment) and micro-environment

Internal environment includes all resources of organization For the act of

developing business strategy, we need to analyze the internal environment to see clearly strengths and weaknesses Basing on that basis we bring out solution to limit the downside and to prove strength for gaining the maximum advantage

The main elements of the internal environment include: management, marketing, finance - accounting, manufacturing, research - development and human resources

Industry environment includes factors in industry which organization decides the

nature and extent of competition in business There are 5 basic elements of industry environment: suppliers, customers, competitors, new competitors and substitutes

Macro environment includes factors outside the organization which shapes and

affects the industry environment and internal environment and it also creates the opportunities and risks for organizations Macro environment includes the basic elements: economy, culture - society - demographic, politic- law, nature and science

- technology Each factor can independently affect organization or work in conjunction with other factors

Macro environment and industry environment combine together referred to as

the external environment Each element of the external environment or the alignment of them can be opportunity or threat for organizations Through analysis

of them, organization can determine opportunities which they can leverage and the risks that you should avoid

1.4 The tools for developing and choosing strategy:

1.4.1 Internal Factor Evaluation (IFE):

The internal situation of the enterprise is usually evaluated through functional division such as Finance, Human Resources, Operation Management, Organization Structure, Marketing, Information Technology, etc The internal analysis of business will help to identify business’ strengths (S) and weaknesses (W) Through them, to choose appreciate business strategy

The evaluation of internal factors’ study is very important and an integral part

of strategic management If administrators do not research internal environment of business, can not figure out the strengths and weaknesses of the business correctly Therefore they can not come up with a perfect strategy

1.4.2 External Factor Evaluation (EFE):

An organization’s environment is the factors, forces and institutions outside the business that administrators can not control but they have tremendous impact to

operation and performance of the business

The external environment of organizations can be divided into two levels:

- Macro environment: affects all business field such as the economic environment, legal environment, social and cultural environment

- Micro Environment (also known as the industry environment) was determined for each specific occupation It includes such factors as: (1) competitors, (2) customers, (3) suppliers, (4) potential rivals, (5) substitutes

- Analysis of external environment factors will help businesses to identify clearly what are the opportunities (O) and the challenges which they have to face

1.4.3 Competitive Profile matrix:

Competitive Profile matrix (CPM) implies impact of factors which affect to nature decision and extent of organization’s competition in the business industry CPM identifies main competitors with the strengths and weaknesses of their special The external factors when developing CPM are cared: suppliers, customers, competitors, substitutes and potential rivals CPM also includes some internal elements which is the most important decision of the organizational success when comparing to competitors Replying on analysis of these factors, we can draw the advantages and disadvantages of competitors compared with the organization That

is, CPM is the synthesis of the impact of comparative factors both inside and outside

of the organization

1.4.4 SWOT matrix:

SWOT analysis is a very useful tool to understand and to make decisions within any situation for any organization 4-digit stands for Strengths (strong points), Weaknesses, Opportunities and Threats SWOT provides a strategic analysis

to review and to evaluate the position and orientation of a company or a business plan SWOT is suitable for working and analyzing in groups, be used in business planning, strategy, competitors’ evaluation, marketing, product development and service

Strengths and weaknesses is the internal factors of the company Opportunities and Threats are external factors that impact the SWOT analysis with different factors and they influence the relative competitiveness of the company SWOT usually combined with PEST (Political, Economic, Social, Technological analysis), market analysis’ model and evaluation of market potential through external factors in terms of politic, economy, society and technology Analyzing according to SWOT analysis model is the evaluation of the data which are arranged

in form of SWOT as a logical order to help readers to understand, to present and to arrive at the decision easier

- SWOT Matrix: a tool combining the strengths (S), weaknesses (W), opportunities (O) and threats (T) to form four types of strategies such as the following table

List of Threats S-T Strategies W-T Strategies

To create a SWOT matrix administrator must implement the 08 steps as follows:

Step 1: List the main opportunities from the external environment (O1, O2 )

Step 2: List the main threats from the external environment (T1, T2 )

Step 3: List the main strengths of the business (S1, S2 )

Step 4: List the key weakness of the enterprise (W1, W2 )

Step 5: Combine the strengths with opportunities (SO)

Step 6: Combine the weaknesses with the opportunities (WO)

Step 7: Combine the strengths with threats (SO)

Step 8: Combine the weaknesses with threats (WT)

The purpose of SWOT matrix is to set out feasible strategies which can be chosen, not decide what is the best strategy Therefore one of development’s strategies in the SWOT matrix, only some of the best strategy is selected for implementation

1.4.5 Strategic Position & Action Evaluation (SPACE)

The strategic Position and Action Evaluation matrix is a management tool to

be used to analyze the strategy It is used to determine which strategy the company should do

FS

ES

CA

Aggressive Conservative

+6 +5 +4 +3 +2 +1

-1 -2 -3 -4 -5 -6

+1 +2 +3 +4 +5 +6 -6 -5 -4 -3 -2 -1

IS

Original frame of this picture shows offensive strategy, cautiousness, defensiveness

or competition are most suitable for a certain organization The axes of the SPACE Matrix represent two aspects within the organization (financial strength [FS] and competitive advantage [CA]) and two external dimensions (environmental stability [ES] and industry strength [IS]) These four factors are the most important decisions

for general strategic position of an organization

1.4.6 Quantitative Strategic Planning Matrix (QSPM):

QSPM matrix (Quantitative Strategic Planning Matrix) is a tool that permits strategists to objectively evaluate substitutable strategies, firstly basing on the key success factors of the inside and outside defined Like the other analysis of establishing strategy, QSPM matrix requires good judgment by intuition

1.5 The role of strategic management for the development of business

According to Garry D Smith and other authors, strategic management affects

as follow:

(1) Helping organizations to find their purpose and direction Recognizing the desired results and future goals helps both leaders and employees to understand what needs to be done to achieve success Therefore it will encourage both above groups get the short term achievements to better long-term welfare’s company

(2) Environmental conditions, which organization has to face, quickly changes and they often create surprised things Strategic management helps administrators to clearly see environmental conditions in the future Basing

on these conditions, they can better grasp and take advantage of opportunities

as well as reduce risks

(3) Helping companies to associate the definite decisions with relevant environmental conditions, thereby accounting for active position or passive attacks

(4) The most important reason to apply strategic management is almost companies’ study shows that businesses, which are using strategic management, can achieve results better than the previous results when comparing with the results of companies do not

1.6 Model of 5 competitive pressures by Michael Porter

1.6.1 Supplier’s competitive pressure:

Supplier’s quantity and size: Supplier’s quantity will decide competitive pressure and negotiation power for industry and business If there are a few suppliers with large size, they will create competitive pressure which affects the entire business activities of the sector

Substitutable products of supplier: In this issue we study the possibility of replacing the inputs from suppliers and switching cost of supplier

Supplier’s information: In the current era, information is always a factor which promotes the commercial development and supplier’s information influences

on selecting input suppliers for business

For all the industry, suppliers always cause the certain pressure if they have scale, aggregate and the possession of precious resources Therefore retail suppliers

of input products, such as farmers and artisans, will have little negotiation power with businesses despite the large quantity but lacks of organization

1.6.2 Customer’s competitive pressure:

Customer is a competitive pressure which can directly affect the entire business activities of the sector

Customer can be divided into 2 groups:

+ Retail customer

+ Distributor

Both groups pressure company into price, product quality and attached service and they are controller of competition in industry through the purchase decision

Similar to pressure from suppliers we consider the impact on the competitive pressure from customers for industry

1.6.3 Competitive pressure from potential competitors:

According to M-Porter potential competitors are businesses which are currently unavailable in the industry but they may affect the industry in the future Potential competitors are more or less, their pressure for industry is strong or weak All will depend on the following factors:

+ The attractiveness of the industry: This factor is reflected by indicators such as interest rate, the number of customers and enterprises in the industry

+ Barriers of joining industry: are factors which make business entered in industry more difficult and expensive

1 Technique

2 Capital

3 Commercial elements: Distribution system, brand and customer

system,

4 Particular resources: input materials, degree, patents, human

resources, Government protection

1.6.4 Competitive pressure from substitute products:

Substitute products and services are the products or services which can satisfy the same need in the industry

Main competitive pressure of substitute products is the ability to meet demand compared to other products in the same industry In addition, factors of price, quality and other environmental factors such as culture, politics, technology, they will also affect the threat of substitute products

Sudden nature, unpredictability of substitute products: With the development

of technology can create substitute products for their own sector even internal industry Mobile phone is substitute product for fixed telephone and VOIP will replace both of them in the near future

Switching cost: We know the open source software like Linux or Viet Key Linux in Vietnam with very cheap price or even free But very few people use them because the cost of switching from Windows operating systems and applications to the other operating systems can be very high and affect the operation as well as the work on the computer

1.6.5 Competitive pressure from internal industry:

Businesses are trading in the same industry, which directly compete each other and create return of pressure on industry, will create a competitive intense In the same industry, these following factors will increase competitive pressure on competitors

+ Industry status: demand, growth rate, the number of competitors

+ Industry structure: concentration or dispersion

 Dispersive industry is an industry has many businesses which compete with each other but there is not business which can control the remaining companies

 Focused industry: is an industry that there are only one or a few firms which hold a dominant rule (Competitive control and can be considered monopoly)

+ Exit Barriers: Like the barriers of joining, exit barriers are factors which make withdrawal of the industry more difficult:

 Technological barriers, capital for investment

 Tie with employee

 Tie with Government and related organizations( stakeholder)

 Ties of strategies and plans

CHAPTER 2: OVERVIEW AND SITUATION ANALYSIS OF

VIET PHU FOODS AND FISH CORPORATION

2.1 Overview of fishery, difficulties and challenges:

After 10 years of continuous growth, Vietnam currently has seafood products over 160 countries in the world and is ranked in the top of six countries with the largest seafood export all over the world In

2011, aquatic products’ export turnover increases 3 times from USD 2 billion in 2002 to USD 6.1 billion

in 2011 This result is more meaningful in the context of the difficult global economy when the effects of climate change, natural disasters and aquatic products’ fisheries occur in many regions of the world that has affected to our export and many import markets in the continent It demonstrates that the aquatic products sector still remains steady growth and greatly contributes to the general economic growth in Vietnam

Figure 2-1: Main Markets of sea products in 2011

MAIN MARKETS OF SEA PRODUCTS IN 2011

Main products of aquatic industry in 2011

Source: Vasep

Figure2-2: Main products of aquatic industry in 2011

Vietnam's fishery sector has faced many difficulties and challenges continuously such as:

+ Source of materials: Input costs for mining and aquaculture increase largely, supply of shortage raw material is lack of stability The shrimp, Tra and Basa fish, squid, clams lack of materials, so it has led to increase raw material prices Some plants operate only 40-60% of capacity, some plants stops working; others have to import raw materials from countries in the region such as Thailand, Indonesia, Malaysia, Africa, and Sri Lanka…… Caused by natural resource are caught exhaustedly Farmers, fishermen have not totally taken the needs and meet their exports

+ Lack of labor: The fisheries sector is the lack of qualified workers with the level of knowledge, the behavior of industrial process from farming to processing Without early training of qualified aquaculture, the seafood of Vietnam will be abandoned and that is unavoidable

+ Lack of capital: Without timely funding, farmers and aquaculture production will fall into a small production, lack of scale and it is so difficult to access science and technology The fisheries sector proposals that the government

should have reasonable policies for loan, basing on each business capability and export processing

+ Markets: the impact of the global economic crisis, especially Europe, Eastern Europe to reduce consumption and increase bad debt The staples are fish, shrimp, tilapia were brought into the red list in six European countries In addition, commercial competition with many games at dumping prices, high taxes, for the product is no hygiene also makes the fish; shrimp of Vietnam is stagnant on world markets Recently, in the traditional markets of Japan, the export shipments of Vietnam's fisheries contains the active ingredient of “Trifluralin” was exceeded the permitted level It makes the demand of imports and Vietnam seafood consumption was declined In addition, some regional countries such as India, Thailand, Indonesia, Philippines has expanded its production, increasing production, building

a reputation and brand on the world market In this context, the export market of Vietnam’s fisheries is more likely to be reduced if not earlier strategy

+ Quality, hygiene and food safety: The import market is increasingly demanding more quality, hygiene and food safety The development status of widespread farming makes up to everyone, especially the inability to manage the quality of seeds, farming environment, antibiotic residues, and the production of chemical processing soak up toxic weight affect reputation of the industry Ensuring hygiene and safety control of the entire food production chain of the business and stakeholders to achieve quality, food safety is a major challenge for the fishery

+ In addition, other input costs for production are increasing, inflation, interest rates are raising is also the challenge for enterprise

2.2 Overview of VIET PHU FOODS AND FISH CORPORATION

2.2.1 History and development of the Company

Viet Phu Foods & Fish Corporation (“the Company”) was formerly Viet Phu Export Food and Agricultural

& Aquatic Product Processing, Trading Co., Ltd It was founded in May, 2003 at My Tho industrial zone, Tien Giang province with the charter capital of VND 4,000,000,000 Specialized business is export frozen processing of oysters After an outbreak of polluted sea water, output of oyster materials of natural fishing that is almost no longer available, raw material prices increased sharply and the market plummeted sharply Until 2007, the company expanded the investment of machinery, equipment, buildings and further processing of Basa fish They also transfer type of enterprise into stock company

- Company name : CÔNG TY CỔ PHẦN NÔNG THỦY SẢN VIỆT PHÚ

- Tranaction name: VIET PHU FOODS AND FISH CORPORATION

- Short name: VIET PHU FOODS & FISH CORP

- Charter capital : 25,000,000,000 VND

- Business license number : 1200480235 issued by the Planning & Investment Department

- Board of leadership :

+ President: Nguyen Van Ky

+ Director: Truong Quang De

- EU code : DL 252

- Human resource : 600-900 labors

- Area: 14.000m2

- Certificate in quality : HACCP, BRC, GMP, SSOP, ISO 22000:2005 and grnated a Certificate in HALAL to export to the Muslim community domestically and abroad

- Viet Phu Corp is a member of the Society in Vietnam’s processing and export of aquatic products (VASEP)

- Markets - export: Europe, Russia, Eastern Europe, Brazil, Mexico, Australia, Middle East and Asian countries

- Add : Block 34-36 My Tho industrial zone, Tien Giang province, Vietnam

- Processing of frozen aquatic products for export such as: oysters, pangasius

- Products: Whole clams, meat clams, pangasius fillet, or cut into pieces, wholly cleaned, breaded,

2.2.3 Structure

Chart of the company’s structure

2.2.4 Tasks - functions of the division department

- General Assembly of Shareholders is the highest decision making agency of the company including all voting shareholders, meeting at least once a year General Assembly of Shareholders decides what issues are law and Charter Regulations of Company General Meeting of shareholders through the annual financial statements

of the Company and the financial budget for next year, electing and dismissing members of Board of Management, Supervisory Board member of the company …

- The Control Board is the agency 0f independently operational functions of Board of Management and Board of Directors, Supervisory Board elected by the General Meeting of Shareholders and on behalf of General Assembly of shareholders to present and supervise all business activities of the Company, reporting directly to General Assembly of Shareholders The Company's Supervisory Board has 03 members for a term of 05 years

- Board of Management is the Management agency of company, shall have full authority in the name of the Company to decide, exercise the rights and obligations of the Company under the authority of General Assembly of Shareholders Chairman of Board of Management elected by Board of Management

Managing Board

Board of Directors

Finance department

Department of Administration – Human Resource

Sales

department

Technolog

y department

Department of quality management

General Meeting of shareholders Board of control

Department

of production control

- Board of Directors of the Company appointed by Board of Management with the task of organizing and managing all production activities of daily business

as the company was approved with planning of Managing Board and the General Assembly shareholders Board of Directors consists of 03 members, including 01 directors and 02 deputy director

- Sales Department:

+ Find customers, negotiate and conclude the purchase contract

+ Plan to purchase raw materials and sell finished products output

+ Carry out procedures for the imported goods

+ Care and settle all complaints and queries of customer remind and urge the payment of debt

+ Prepare reports, plans and advice on business matters for the board of directors

- Administrative - Human Resources Department:

+ Responsible for formulating and implementing development strategies for corporate resources, construction and implementation of recruitment procedures, construction and control of labor regulations, resolving disputes of labor and set up workers training programs Subscribing to emulation and commendation, the insurance policy regimes, etc

+ Building wage scales, wage tables, labor contracts,

+ Responsible for deployment in developing and supervising the administrative, medical and security Establishing and maintaining good relations with the authorities, managing administrative, clerical, drafting regulations on the company's activities

+ Implementation of labor safety and hygiene

- Financial Affairs Department: Responsible for establishing, implementing,

+ Responsible for the compilation of documents, records, storage, synthesis and reporting documents under the current accounting regime

+ Implementing of the management of financial operations at the company, considering and suggesting solutions to the Board of Directors on the financial situation to mobilize and use capital efficient business

- Technical Department:

+ Operating all machinery, plant equipment

+ Responsible for the planning, implementation and process control, repairing and maintaining the machinery and equipment, evaluating technical factors

of preparation machinery and equipment to purchase, proposing regulations on occupational safety and fire prevention, researching, innovating, manufacturing equipment for production

+ Organizing and supervising the implementation of standards on environmental sanitation, waste

- Quality Management Department: Responsible for managing and

maintaining quality systems, environment, and waste

+ Responsible for testing and ensuring the quality of raw material from inputs

to outputs

+ Supervising the implementation HACCP, BRC, GMP, SSOP, ISO 22000:2005

+ Registration for product quality at the request of authorities or customers

- Executive Producer Department:

+ Implementing the organization of production of the company's product process, the approved plan

+ Monitoring and testing of raw materials, materials, tools of each production stage

+ Combining with the relevant parts chain management organization that produced the most effective

+ Reporting, proposing on the situation of manufacturer for board of directors

2.3 Summarizing the results of operations of the company during the period

2007 – 2011

2.3.1 Summarizing the operations of the Company period 2007-2011

2007 is the first investment of the company to expand two buildings and machinery such as machine of sliced fish skin, file table, fish shaped table, camera, belt freezers, cold storage of finished products, etc Using for production of tra and basa Current capacity of plant is 70 tons / day, investing in waste water treatment system, sanitation system for environmental protection, fire protection system

Convenient Plant location to receive input materials of river and road of container transporting finished products for export to the port, near the fish abundant materials such as Tien Giang, Ben Tre, Can Tho, Dong Thap, An Giang province,

Viet Phu Co has overcome the barriers of technology, quality, and product design and food safety of importers in the world Plant products always meet international standards To maintain and stay on the hard market and high competitiveness; the Company won the prestigious exports from 2008 to present

Material for the production of the plant is relatively constant and stable to ensure such standards that are not infected with antibiotics, toxic chemicals Do not use prohibited substances in accordance with the industry, uniform size of fish and low norms

Company associated with the leading companies in the industry of tra and basa fish as Hung Vuong Joint Stock Company has a shareholder of supply materials accounted for 45% yield, AGIFISH provide 35% of materials and 25% materials buy from farmers

VIET PHU & FISH FOODS CORP equipped with laboratory equipment and testing machines to test samples for the daily production process from input

founding the reason from any production that immediately remedied to avoid contamination of other phases

After 9 years of operation Viet Phu Co has well experienced staff of management and skilled workers that is decisive factors for success in business The company always fulfills the health insurance policy, social insurance, unemployment insurance, protection equipment workplace safety and reward policies In addition, the company also supports poor workers; difficult diseases workers such as build houses of compassion, borrow money for medical treatment, home repair, rental accommodation create conditions for the workers to stick steady employment with the company

Apart from fulfilling their tax obligations, the company also contributed to increased exports, participating in many social activities locally and supporting other provinces such as flood relief, natural disasters, and house of gratitude, love, scholarships to poor students and many other charitable activities The company is recognized through many awards, certificates of merit of the locality

With the successes already achieved, in the near future Viet Phu will not stop

to further improve product quality, service quality to ensure food safety for people and assert them in the Vietnam’s fisheries sector and in the world

2.3.2 The results of business period 2007 – 2011

5.30

6.50 2.75 6.20 10.40

5.21 6.67 12.10 19.84

8.71

17.56 13.38

Source: Finance department of VietPhu Corp

Figure 2-3: Perforamnce of Viet Phu Foods & Fish in the period of 2007-2011

Through chart we see that Viet Phu Company developed very well and although they have influenced even as the global economic crisis especially in Europe, inflation, high interest rates Turnover increased from $ 6.5 million in

2007 to 22.27 million in 2011 (an increase of 242.61%) is due to company expansion and Basa fish products Consumer markets throughout the continent Net profit increased from 2.75 billion in 2007 to 10.6 billion in 2011, particularly, in

2009 profit increased sharply19.84 billion that is due to the purchase price of material reduces sharply, surplus production is supported by the State and 4% / year interest rates for bank loans to business under the Decision No 131/QD-NHNN of the Prime Minister issued on 01/23/2009 Interest income from exchange rate differences is high

2.4 Analysis – limitations, existence of Vie Phu Corp in the period of 2007-

as well as effective unpredictable changes of business environment making the planning of Company that is limited

The Company does not build a specific strategy in the long term over 5 years which was only set out plans for next year This does not mobilize the power of collective intelligence to make the goal to improve efficiency and create economic

The organizational structure of the company is simple, compact; the arrangement of personnel in charge of the work for each department is relatively good, clearly reflected in job descriptions for all positions Particularly, the staff of sales department mostly focused on the business of sale and export documents that

do not have specialized personnel in charge of forecasting, marketing, research and market development

Functional control of the Company is made good Operation in the form of joint stock company, the company had a separate board under the control of the General Assembly of shareholders of the Company to strictly control the management, operation of the organization and performance business of the Company to ensure that actual results achieved consistent, consistent with planned results, and editing errors to help companies operate more efficiently

The company leadership has 15 years of operation in the fisheries sector; they are experienced and knowledgeable in many areas This makes the subordinates are not developing the capabilities, from themselves, or relying only waiting on the guidance of their superiors The work will easily stalled between the stages or parts and leaders often work under pressure overload When the director is long absent, the work of the company is not smooth and impeded

2.4.1.2 Functions of human resource

The operations of human resource is top concern of manager in company and assigned for administrative offices to undertake management of the number of employees, compensation, policies, claims dispute resolution, staff development, Total number of employees of the company up to 31/12/2011 is 807 people, 526 people in 2007 In which women accounted for 58%, the company has signed 87%

of long-term labor, 13% of seasonal contracts Number of employees is increased because the production needs to increase output

Table 2- 1: Qualifications of the workforce

Postgraduate Graduate College Intermediate

Unskilled labor Total

Density 0.00% 4.05% 2.88% 3.79% 89.28%

Source: Department of Administration – Human Resource at Viet Phu Corp

All employees are recruited by the company that will have to organize professional training consistent with the work assigned Most training at the locality for unskilled workers, some special expertise the company sent to study at the training center outside as VCCI, VASEP, NAFIQAVED, PACE, Griggs, etc The company regularly inspect, improve training, new knowledge by updating the progress of science and technology according to the industry

Recruitment procedures are basically built and implemented to comply with the provisions of labor law Over 90% of workers were left in Tien Giang in the neighboring provinces of Ben Tre, Long An, Can Tho The salary varies in accordance with each organization, each department and each staff member in charge of work Total income of workers is relatively high comparing with the average of other enterprises in the industrial zone in Tien Giang That represents the majority of employees working at long attachment; they don’t change their job in other company

The company implemented many welfare policies such as social insurance, health insurance, unemployment insurance, according to union rules Organizing annual tourist attractions in the country and abroad, rewarding and improving the quality of meals, protective equipment safety, support the full cost of training, poor support workers difficult, accidents, etc Companies are creating work environments and conditions for employees and safe work in a long time

The human resource management almost done well but the relationship

2.4.1.3 Production activities - Operation

Originating from oyster processing plant and when renovate, repair and upgrade fish processing plants simply have many place that is arranged unreasonable, limited surface area Equipment and machinery are average and are not synchronized and modern because too little capital investment Cold storage to preserve of finished products output by 40% to 60% of stock must hire outside company to the costs of warehousing, transportation costs and other costs involved Average processing of plant is 50 tons / day