Business strategy for vegetable oil in cambodian market of Vietnam national sundries import and export joint stock company until 2018

Page i GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION BUSINESS STRATEGY FOR VEGETABLE OIL IN CAMBODIAN MARKET OF VIETNAM NATIONAL SUNDRIES IMPORT AND EXPORT JOINT STOCK COMPANY U

Page i

GLOBAL ADVANCED MASTER OF BUSINESS

ADMINISTRATION

BUSINESS STRATEGY FOR VEGETABLE OIL IN

CAMBODIAN MARKET OF VIETNAM

NATIONAL SUNDRIES IMPORT AND EXPORT

JOINT STOCK COMPANY UNTIL 2018

Class : GaMBA01.C0411 Group: 2

1 Truong Hong Hai

2 Do Trung Truc

3 Nguyen Mai Anh Kha

4 Nguyen Minh Duc

TP.HCM - 2013

ACKNOWLEDGEMENTS

First of all, we would like to express our appreciation to all professors and staff

at ETC - Nation University Hanoi for giving us chance to obtain knowledge in mordern advanced business administration We highly appreciated their support to help us successfully accomplish the whole program of Global Advanced Master of Business held by the Center

We also would like to thank our classmates from GaMBA.C0411 class who always supported and encouraged us while completing this paper

Last but not least, we would like to give thanks tothe Board of Management of TOCONTAP for its provision of relevant data of the Company

The joint paper could not have been completed without the cooperation and hard work of all members of the Group resulting in deep understanding and high accord when choosing the topic, gathering information and analyzing them

ABBREVIATIONS

TOCONTAP: Vietnam national sundries import and export joint stock company

BCG : Boston Consult Group matrix

EFE : External Factor Evaluation Matrix

CPM :Competitive Profile Matrix

QSPM: Quantitative strategic planning matrix

SWOT: Strengths- weaknesses- opportunities- threats

SPACE: Strategic Position &ACtion Evaluation matrix

GDP : Gross Domestic Products

Contents

ACKNOWLEDGEMENTS ii

INTRODUCTION 1

1 General 1

2 Objectives and scope: 1

2.1 Objectives: 1

2.2 Scope: 2

3 Method: 2

4 Outline: 2

CHAPTER 1: RATIONALE OF STRATEGIC MANAGEMENT 3

1.1 Concept of business strategy planning 3

1.1.1 Concept of strategic management 3

1.1.2 Role of business management towards enterprises 4

1.2 Classification of business strategy 4

1.2.1 Specific strategies 4

1.2.2 Perspective of Michael Porter about the typical strategies 6

1.3 Process of strategic planning 7

1.4 External factor evaluation 8

1.4.1 Macro factor evaluation 8

1.4.2 Industry factor evaluation 10

1.5 Internal factor evaluation 11

1.6 SWOT 11

1.7 Matrixes for effective selection of strategies 12

1.7.1 Process to form a general strategy 12

1.7.2 Industry evaluation: External Factor Evaluation (EFE) 12

1.7.3 Industry evaluation: Competitive Profile Matrix (CPM) 14

1.7.4 Analysis of operation: Internal Factor Evaluation (IFE) 15

1.7.5 Strengths- weaknesses- opportunities- threats (SWOT) 15

1.7.6 Internal-external factor matrix (IE) 17

1.7.7 BCG matrix 17

This matrix is offered by the leading management consultancy company of the U.S as Boston aiming to help the large companies assess the operating situaiton of the business units From that, the managers will decide to allocate the capital for SBU and assess the finacial situation of the company 17

1.7.8 SPACE matrix 18

1.7.9 Quantitative strategic planning matrix QSPM 19

CHAPTER 2: CURRENT PRODUCTION AND BUSINESS IN VEGETABLE OIL OF TOCONTAP 21

2.1 Introduction to TOCONTAP 21

2.1.1 Overview 21

2.1.2 Establishment and development 21

2.1.3 Organizational structure of company 26

2.1.4 Business Model of Vegetable Oil 26

2.1.5 Process of vegetable oil 27

2.2 Internal factor evaluation of TOCONTAP 28

2.2.1 Human resources 28

2.2.2 Management activity 29

2.2.3 Marketing activities 30

2.2.4 Financial management activity 31

2.2.5 Information System 33

2.2.7 Corporate Culture 34

2.2.8 Internal Factor Evaluation Matrix (IFE) 35

2.3 Analysis of external factors 36

2.3.1 Analysis of macro environment 36

2.3.2 Analysis of the micro-environment 41

2.4 General observation 53

2.4.1 STRENGTHS OF TOCONTAP 53

2.4.2 WEAKNESSES OF TOCONTAP 55

2.4.3 CHANCES OF TOCONTAP 55

2.4.4 RISKS OF TOCONTAP 56

CHAPTER 3: TOCONTAP’S BUSINESS STRATEGY FOR VEGETABLE OIL ON CAMBODIAN MARKET IN 2018 57

3.1 Development target of TOCONTAP 57

3.1.1 Vision, mission, core values, and business philosophy 57

3.1.2 TOCONTAP’s target for vegetable oil up to 2018 57

3.2 TOCONTAP’s business strategy for oil in 2013 -2018 58

3.2.1 SWOT Matrix 58

3.2.2 Selection of strategies based on QSPM: 61

3.2.3 Deciding Strategies: 71

3.3 Solutions to implement strategic product development in the vegetable oil in Cambodian market in the period from 2013 to 2018: 73

3.3.1 Solutions to enhance marketing activities: 73

3.3.2 Solution to develop market share: 77

3.3.3 Solutions to increase investment 78

3.3.4 Solutions to training and development of human resources: 78

3.4 Recommendations 82

3.4.1 For the Government 82

3.4.2 For institutes and universities 83

3.4.3 For producers and oil business 83

CONCLUSION 84

APPENDIX 1 85

APPENDIX 2 94

APPENDIX 3 96

REFERENCES 99

INTRODUCTION

1 General

In the present trend of economic integration, the competition is very fierce If the companies want to survive on the market sustainably, and want their products can compete with the products of other enterprises, there is no way other than an effective business performance Therefore, it is a concern for any enterprises to find solutions for effective business performance

Before the increasing entries of vegetable oil enterprises in domestic country, the competition is severer and severer TOCONTAPchooses the direction as the exporter of goods including the export of vegetable vegetableoilto Cambodian, Laos and Myanmar markets Through the market survey and trade in previous items in Cambodia, we conducted a theroretical research on competitve strategy, analyzed the business situation of TOCONTAPto develop a business strategy for Wellcookvegetable oil at the Cambodian market until 2018

2 Objectives and scope:

2.1 Objectives:

The business enviroment of vegetable vegetableoilis changing quickly and the competition is very fierce among enterprises at Cambodian market The choose of this topic aims to:

in the present and future Specifically, perform the internal and external factor evaluation to identify the opportunities and threats aiming to determine the competitive advantage of the company in the vegetable oil industry in Cambodian market

vegetable oil products

 Suggest the solutions in order to support for the implementation of successful solutions

2.2 Scope:

The dissertation mentions to the most basic concepts as the strategic

management planning; analysis of matrixes aiming to select the efefctivestartegies; internal and external factor evaluation of enterprises, concepts of vegetable oil production, etc and related concepts

From the above theoretical concepts, we will apply it to develop the business strategy for TOCONTAPvegetable oilbrandedWellcook at Cambodian market until

2018

3 Method:

The Qualitative Research Method through the discussion with the managers and experts of the vegetable oil company to analyze the tendency of market In addition, the dissertation also uses the appropriate secondary documents to analyze the issues related to the topic

4 Outline:

With the content mentioned as follows, the dissertation has the structure as follows:

 Chapter 1:Literature review

 Chapter 2: Current production and business in vegetable oil of TOCONTAP

 Chapter 3: Business strategy for vegetable oil products in Cambodia market

until 2018

CHAPTER 1: RATIONALE OF STRATEGIC MANAGEMENT

1.1 Concept of business strategy planning

1.1.1 Concept of strategic management

The concept of “strategy” appeared early in the studies for the purpose of war in the history According to the ordinary definition (the Greek word is strategic) It is a military term indicating the planning and arrangement of force with the purpose of defeating the enemies Sun Tzu is aChinese military He wrote the book “the Art of Operation” discussing on the military strategy

Carl von Clausewitz – the author of “the art of operation” in the century 19 – considered the strategy as the “planning of operation and implementation of schedule”

Until the middle of century 20, the research and development of business strategy was really strong From the scholars Drucker, Chandler, Ansoff, Andrew, those research the development of great success of economic groups in the United State before and after the Second World War, to the present economic managers such as Michael E.Porter, Fred R.David, Rudolf Grunig, Richard Kuhn…had different views of business strategic managements

According to Wikipedia, the strategic management is a science and art aiming to develop the orientation and objectives, implement the short and long-term plan based on the available resources, help each organization obtain its long-term objectives

These are different definitions of strategies:

“The strategy is the determination of basic and long-term objectives and purpose of company and use of actions as well as distribution of necessary resources to reach such objectives” – Chandler (1962)

“The strategy is to combine the resources between the organization and environment, the systematical consistence between the decision of organization and environment” – Mintzberg (1979)

“The strategy is a system or plan aiming to integrate objectives and policies and series of actions to a close general” – Quinn (1980)

“The strategy is a difference Those are the selections of calculation for different actions to create the best value” – Michael E.Porter (1996)

“The strategy is the means to obtain the long-term objectives” – Fred R David (2003)

“The strategy is the orientation to long-term management and ensure the accomplishment of long-term objectives and main purpose of company” – Rudolf Grunig and Richard Kuhn (2003)

1.1.2 Role of business management towards enterprises

The strategic management and development promote the enterprises in term of following issues:

- Obtain the long-term and stable objectives of company

- Gain the market or market share

- Resources (human resources, ability, asset, finance, technical method) to obtain the above objectives

- External potential threats affecting to the implementation of strategies include the environment, politic, natural resources, etc and solution for prevention

- The value that the enterprise brings for the owner and society

1.2 Classification of business strategy

1.2.1 Specific strategies

According toR.David, it can be divided into 14 typical types and it is

classified into 4 groups as follows:

1.2.1.1 Integration strategy

- Forward integration: it relates to the increase in ownership or control for the dealers or retailers The effective solution to promote this integration strategy is the transfer of ownership The companies can develop quickly through the

transfer of ownership because the cost and opportunities are divided for members

- Backward integration: it relates to the search for ownership or control of suppliers This strategy is especially suitable when the present suppliers are not reliable at high price and fails to meet the demand of company

- Horizontal integration: it relates to the construction of ownership or control for the competitors The merger and acquisition help to improve the efficiency of scale and increase in exchange of resources and ability

1.2.1.2 Intensive strategies

- The market penetration is to research the additional market share for the products and services in the existing markets through the efforts of marketing The market penetration includes the increase in marketing staff, increase in advertising cost, products or other advertising efforts

fields

- Market development is the increase in revenue by improving or adjusting the current products or services The product development requests the high cost for development and research

- Narrowed activity is the enhancement by reducing the cost and asset aiming to save the revenue and profit

- Cutting down on the activities is the sale of a branch or a part of Company

- Liquidation is the sale of all assets at the fixed value

1.2.2 Perspective of Michael Porter about the typical strategies

According to Porter, basic strategieshelp the company to obtain the competitive advantage in term of 3 different aspects:

customers who are sensitive with the price

for the customers who did not care about the price

- The concentration is the production of products and services in order to meet the demand for small customer segments

One reason to apply the forward strategy, backward strategy or horizontal strategy is to obtain the benefits in the price orientation

Product development is a basic strategy with many advantages to create the characteristics for products (segment strategy) The typical of successful products is that it has a high flexibility, strong ability of combination, low price, improvement

of service, less warranty, high convenience, or has a lot of characteristics

The market penetration and market development brings many advantages

1.3 Process of strategic planning

Table 3.1: DIAGRAM OF COMPREHENSIVE STRATEGY

MANAGEMENT

(Source: Fred David – Overview of strategic management)

The process of strategic management includes 3 stages

- Set the strategies

- Implement the strategies

- Evaluate the strategies

Fred R.David gave the comprehensive strategic management model as table 3.1 Particularly, the stage of setting the plan includes steps: determine the vision, mission, and objectives and then evaluate the external factors to determine the

threats and opportunities to clarify the strengths and weaknesses of the company

Allocate resources

Re-determine the business objectives

Evaluate internal factors, determine the strengths and weaknesses

Choose the strategies

Propose the polciies

Make the plan for classification plan

Vision,

mission,

objectives

Evaluate the external factors, determine the opportunities and threats

Evaluate the implementa iton of strategy

Set term objectives

long-Set annual objectives

From that, determine the business objectives and set the long-term objectives as well as chose the strategies The stage of implementing the strategies will include the allocation of resources aiming to obtain the annual objectives and policy The final stage is the calculation and assessment of implementation

1.4 External factor evaluation

1.4.1 Macro factor evaluation

The external condition is all external factors that the Directors fail to control, and it causes a great impact on the development and profitability of each company External factor evaluation relates to the micro and macro factor evaluation.Analysis

of these factors will help the company determine its position and characteristics of environment, and obtain the impact of environment on the enterprises aiming to make the appropriate decision in strategic planning

The change in macro-environment can directly affect all resources in

industry, resulting in the change of interaction between the resources and

attractiveness of industry The macro-environment includes 6 parts: economic, demographic, sociocultural, Demographic, political/legal, technological and global

Table 3.1 FACTORS OF MACRO-ENVIRONMENT

Economic

The economic factors are the growth rate, the stability of economy, purchasing power, the price stabilization, money, inflation, exchange rate, etc affecting to the business performance

Cultural-social

Cultural and social factors affect to the profit of company in the market research The social factors will divide the community into different customer segments with the different characteristics, psychology and income

- The average age, situation of health and nutrition

- The average income, allocation of income

- Life-style, understanding, perspective of aesthetic, and psychology

Technical factors are new production method, new material, equipment Way

of production, invention and applied software …

1.4.2 Industry factor evaluation

According to Michael Porter, there are five competitive factors in the

industry including:: (1)new entrants; (2) Ccompetition between the existing

companies; (3) Bargaining power of purchaser; (4)Bargaining power of seller; (5) Threats of substitute products or services

Table 3.1 MODEL OF FIVE COMPETITIVE FACTORS

The competitive pressure from the suppliers

- Quantity and size of suppliers

- The substitutes of products of suppliers

- Information on supplier

Competitive pressure from customer

The customer is divided into 2 segments including the retail customer and dealer These customer segments can put the pressure on the enterprises in term of product price, quality as well as attached services They can control the competition

in industry by making decision on buying the commodities and services

Competitive pressure from potential entrants

According to Michael Porter, the potential entrants for enterprises do not appear in the market, but it will cause the effect in the future

Competitive pressure from substitute products

Substitute products and services are the products that can satisfy the needs of customer

Competitive pressure from industry

The enterprises in the same industry will compete with each other to put the pressure in the industry and create the fierce competition The industry factors can increase the pressure for the competitors:

- The status of industry

- The industry structure

1.5 Internal factor evaluation

For survival and development, all organizations must implement the activities including the management, finance, accounting, production, business, research and development, marketing, etc and a system of information management In each operating industry, each organization has its own strengths and weaknesses

Internal factor evaluation is one of the important and essential parts of the strategic management If we do not perform tis analysis well, we will not identify the strengths and weaknesses, and we cannot have a perfect strategy

1.6 SWOT

SWOT is the analysis of external factors that the enterprises must encounter (opportunities and threats) as well as internal factors (strengths and weaknesses) The enterprises determine the opportunities and threats through the analysis of data about the change in environment including the economic, financial, political/ legal, social and competition in the markets that the companies are operating or intend to participate

For the internal factor evaluation, the strength of company may be the skills, resources and advantages against the competitors (key capacity of company) The

weaknesses of companies are the restriction or weaknesses as well as weak skill and resources and factors reducing the competition of companies

1.7 Matrixes for effective selection of strategies

1.7.1 Process to form a general strategy

According to Fred R David, the process for strategy will include 3 steps

including penetration, integration and decision

Advisor group (BCG)

Internal/external system (IE)

General strategy system

Stage 3: Decision

Quantitative strategic planning matrix (QSPM)

1.7.2 Industry evaluation: External Factor Evaluation (EFE)

- EFE assess the external factors, tổng hợp and summarize the opportunities and threats of external factors of the operating process of the company From that, it helps the managers to assess the level of response of the company to the opportunities, threats and offer the assumptions of external factors as the advantages or disadvantages of the company

- Step 1: list 10-20 key opportunities and threats that you suppose that they can

affect the success of the company in the industry/ field

- Step 2: Assess the level of importance of each factor according to the range

from 0,0 (not important) to 1,0 (very important) for each factor The importance

of each factor depends on the level of influence of such factor on line of business that the company is doing the business Total score of each factor must

be 1

- Step 3: Determine the weight from 1 to 4 for each factor The weight of each

factor depends on level of response of each company to factor 4 is good response 3 is over average response 2 is average response and 1 is less response

- Step 4: Multipy the importance of each factor with its weight to get the score of

importance

- Step 5: Sum up score of all factors to determine total score of matrix

Assessment

Total score of matrix does not depend on the quantity of factors in the

matrix, the highest score is 4, and the lowest score is 1

Factors

Level

of importance

Classification

Important score

Classification

Important score

Classification Important score

If total score is 4, the company has a good response to the opportunities and threats

If total score is 2.5, the company has an average response to the opportunities and threats

If total score is 1, the company has weak response to the opportunities and

threats

1.7.3 Industry evaluation: Competitive Profile Matrix (CPM)

All factors of enterprises, the impact of competition is often considered as the most important The Competitive Profile Matrix is the expansion of external factor evaluation where the level of importance, classification and total important score have the same

meaning

Total assessed score of competitors is compared to the sample enterprises These factors will be listed in this matrix including the market share, competition, financial position,

product quality, loyalty of customer

The classification shows the way that the strategies of enterprise will response to each factor of competitor: 4 is the best level of important; 3 is higher than the average, 2 is the average and 1 is weak

1.7.4 Analysis of operation: Internal Factor Evaluation (IFE)

Internal factors are considered as very important for each business strategy and objectives proposed by company After considering the internal factors, the strategic managers need

to set the matrix for these factors aiming to consider the ability to response and recognize the strengths and weaknesses From that, it helps the company to take advantage of strengths to exploit and prepare the internal force to fight with the weaknesses and find out

the ways of improvements for these weaknesses

To establish the IEF, we need to implement 5 following steps:

Step 1: list 10-20 key opportunities and threats that you suppose that they can affect

the enterpsies and the goals proposed by the enterprises

Step 2: Assess the level of importance of each factor according to the range from

0,0 (not important) to 1,0 (very important) for each factor The importance of each factor depends on the level of influence of such factor on the sucess of the enterprises in the same industry Total score of each factor must be 1

Step 3: Determine the weight from 1 to 4 for each factor 4 is good response 3 is

over average response 2 is average response and 1 is less response

Step 4: Multipy the importance of each factor with its weight to get the score of

importance

Step 5: Sum up score of all factors to determine total score of matrix.

Assessment:

Total score of matrix that is not in the range from 1 to 4, will not depend on the number of

important factors in the matrix

If total score is below 2.5, the company has a weak internal factors

If total score is above 2.5 point, the company has a strong internal factors

1.7.5 Strengths- weaknesses- opportunities- threats (SWOT)

The strategies are based on the analysis and assessment of factor, identification of strengths, weaknesses, opportunities and threats affecting the survival of the enterprises

From that, determine the strategic solutions to obtain the proposed objectives

Ma trận SWOT SWOT Matrix

WT Strategies

Giảm thiểu điểm yếu và né tránh các đe dọa Minimize wea knesses and avoid

SO Strategies

Dùng điểm mạnh để tận

dụng các cơ hội Use strengths to take advantage of opportunities

Strengths – S

List Strengths (liệt kê các Điểm

mạnh)

Leave Blank

Luôn để trống ô

này

Figure 1.5: SWOT model

Strengths and Opportunities strategy (SO): Use the internal strengths to take advantage

of external opportunities When a company has large weaknesses, it will try to overcome and make it become the strength When an organization must confront to the threats, it will

find ways to avoid them, so that it can focus on the opportunities

Strengths- weaknesses strategy (WO):Improve the internal weaknesses by taking use of

external opportunities Sometimes, the external opportunities exist; the company has the

internal weaknesses to prevent them from exploiting these opportunities

Strengths and threats strategy (ST): Use the strengths of a company to get away from or

cut down on the impact of external threats

Weaknesses- threats strategy (WT): it is the defense strategy aiming to reduce the

internal weaknesses and avoid the external threats

To establish the SWOT, we must do 8 steps:

Step 1: List external opportunities of company;

Step 2: List external threats of company;

Step 3: List of internal strengths of company;

Step 4: List of internal weaknesses of company;

Step 5: Combine the internal strengths and external opportunities and record the

result of SO strategy to the appropriate cell;

Step 6: Combine the internal weaknesses with the external opportunities and record

the result of WO strategy;

Step 7: Combine the internal strengths with the external threats and record the result

of ST strategy

Step 8: Combine the internal weaknesses with the external threats and record the

result of WT strategy

1.7.6 Internal-external factor matrix (IE)

This matrix depends on two main aspects including total importanr score of IFE in

X azis and total importanr score of EFE in Y axis

IE matrix can be divided into 3 main fields: each field includes different strategies

1.7.7 BCG matrix

This matrix is offered by the leading management consultancy company of the U.S as Boston aiming to help the large companies assess the operating situaiton

of the business units From that, the managers will decide to allocate the capital for

SBU and assess the finacial situation of the company

The BCG matrix is a table consisting of 4 cells including:

Horizontal axis: Show the relatove market share of SBU determined by the

percentage between the sales of SBU and the sales of the leading competitors or second competitors.Where SBU is not the leading sales of relative market share of SBU, it isequal to the percentage between the sales of SBU and the sales of the competitor.Where SBU is the leading sales of relative market share of SBU, it is equal to the percentage between the sales of SBU and the sales of the second

competitor

Vertical axis: indicate the annual growth of the market for the products that

ABU business in percentage If the percentage of SBU is higher than 10%, MGR is high (MGR: Market Growth Rate)

1.7.8 SPACE matrix

The SPACE matrix is a management tool used to analyze a company It is used to determine what type of a strategy a company should undertake The core of content are following:

CON CHÓ DOGS

NHỮNG NGÔI SAO STARS

DẤU HỎI QUESTION MARKS 20%

10%

4 5

6 7

CAO

THẤP

Figure 1.4 : The SPACE matrix

The SPACE matrix is constructed by plotting calculated values for the competitive advantage (CA) and industry strength (IS) dimensions on the X axis The Y axis is based on the environmental stability (ES) and financial strength (FS) dimensions

1.7.9 Quantitative strategic planning matrix QSPM

QSPM uses the input data from the analysis in the IFE and EFE to help the

strategists to make objective decision on what alternative strategies are the most attractive and worthy for the enterprises to pursue aiming to implement its

objectives successfully The process of QSPM includes 6 steps:

Step 1: List the opportunities/ threats and strengths/ weaknesses to the column (1)

of matrix These factors are directly taken from EFE and IFE

Step 2: in the column (2) of matrix, fill the number corresponding to each factor in

the classification column of EFE and IFE

Step 3: Research the SWOT and determine the alternative strategies that the

organization should consider to implement and record these strategies to the top row

of QSPM These strategies are classified to the separate groups (if any)

Important

factors(1)

attractive score

Step 4: Determine the attractive score: very unattractive = 1, less attractive = 2,

attractive = 3, relative attractive = 3, very attractive = 4 These values show the

relative attractiveness of each strategy compared to other strategies in the same

group with the alternative strategies

Step 5: Calculate total attractive score of each strategy for the important factors in

the column (1) by multiplying the classification with the attractive score in each month

Step 6: Sum up all attractive score, we will get total attractive score for each

strategy (the appropriate internal and external factors can affect the decision on

strategy).If these scores are higher, the strategy is more appropriate for

implementation

In term of principle, a QSPM can include any number of alternative strategies, and cover any number strategies in a certain group, but only the strategies in a same group are assessed each other For instance, a diversification strategy group can include the concentric diversification and conglomerate diversification, while the other strategy group can include the vertical integration strategy (backward or

forward) and horizontal integration These strategies are different, and QSPM only assesses the strategiesin the same group

CHAPTER 2: CURRENT PRODUCTION AND BUSINESS IN VEGETABLE OIL OF TOCONTAP

2.1 IntroductiontoTOCONTAP

2.1.1 Overview

Name: VIETNAM NATIONAL SUNDRIES IMPORT AND EXPORT JOINT

STOCK COMPANY

Name in English language : VIETNAM NATIONAL SUNDRIES IMPORT

AND EXPORT JOINT STOCK COMPANY

Upon the business certificate No 0103012689 granted by Department of Planning and Investment of Hanoi City on June 01st, 2006, the seventh change is on October

7th, 2012, the line of business of the company is as follows:

- Trade in agricultural products, seafood, forest products, food, handicrafts, grocery, industrial products, textiles, garments; leather and footwear (exclude the forest products prohibited by the State)

- Trade in vegetable and animal oil

2.1.2 Establishment and development

The precursor of Grocery import and Export Company is Grocery Import and Export Company of Ministry of Commerce, as the first import and Export Companyof State of Vietnam, established on 05/3/1956 with the first name as

“Grocery Import and Export Corporation”

During nearly 60 operating years with many stages of histories, TOCONTAP HANOI increasingly develop and stabilize in term of all aspects, and contribute to the development of the country

Because the request on change in the State management by the industry, region in accordance with the characteristic of development of the country in each stage that the organizational structure of the Company had a lot of changes In 1964, all items

of handicrafts of company were separated to set up Art export Company In 1977, the entire textile import export department was separated to establish Textimex Company In 1985, the metal tools and portable items were separated as MecanimexCompany In 1987, the entire leather and footwear were separated to form Leaprodexim Footwear Import and Export Company In 1975, after the South was liberated, many key staff of Company entered to the South to establish the TOCONTAP branch in Ho Chi Minh City When the branch was developed and became a large business unit of the Company, in 1990, upon the guideline of management and operation under the territory, TOCONTAP branch in Ho Chi Minh City was totally separated and form the independent company directly under Ministry of Commerce namedTOCONTAP SÀI GÒN The treasure and warehouses

of the Company were transferred to the foreign trade delivery company during the

Ministry of Commerce, the name of Grocery Import and Export Corporations were converted into Grocery Import and Export Company with the transaction name as TOCONTAP HANOI

In different period, the business development of import and export items of TOCONTAP HANOI constantly developed and met the requirement of economy and defense upon the mission assigned in each period, TOCONTAP HANOI used

most form of business in the Foreign Trade such as the aids, commercial goods and barter, authorization and cooperation to guarantee the development Such situation

is expressed by the following data:

Period 1958-1960: the period that it has just liberated from the French

revolutionwith the old-fashioned agriculture, andunfamiliarityin import and export, the sales was not high The average import and export quotaevery year gains 28.7 million Rup, including 10.7 million Rup of export and 18 million Rup of import Export quota of Corporation accounted for 20.8% export quota of the country

Period 1961-1965:the average Export and import quotaevery year reached 57,

9million Rup, including 29,5 million Rup of export and 33.4 million Rup of import Export quota accounted for 28.8% export quota of the country

Period 1966-1970: because this period is affected by the war, the company suffered

from a serious effect, but it still maintained and strengthened the export and import quota The average Export and import quota every year reached 84.9 million Rup, including 16.5 million Rup of export and 68.4 million Rup of import Export quota accounted for 33.5% export quota of the country

Period 1971-1975: it was still affected by the war The average Export and import

quota every year reached 114.8 million Rup, including 32.3 million Rup of export and 82.5 million Rup of import Export quota accounted for 39.4% export quota of the country

Period 1976-1980: was the rise after the war and recovery of consequences from

the bombs Particularly:

In 1976-1977:the average Export and import quota every year reached 217 million

Rup, including 75.7 million Rup of export and 141.3 million Rup of import Export quota accounted for 27.8% export quota of the country This is the peak ofTOCONTAP, the entire textile was separated as TEXTIMEX in 1978

In 1978-1980:the average Export and import quota every year reached 39.8 million

Rup,

In 1981-1985:the average Export and import quotaevery year reached 64.3 million

Rup, including 27 million Rup of export, and 37.3 million Rup/USD of import

Period 1986-1990:the average Export and import quota every year reached 69.1

million Rup, including 33.1 million Rup of export and 36 million Rup/USD of import

Period 1991-1995: Start the period of innovation, the economy was shifted to the

socialism oriented market economy under the guidance of the State Because it is separated many times and a series of experienced leaders went with key items and markets, and domestic and foreign competition was higher and higher, the quota of TOCONTAP was narrowed The average Export and import quota every year reached 16.7 million USD, including 11.1 million USD of export and 5.6 million USD of import

Period 1996-2000: the period of market mechanism The Company tried to find all

ways to develop and expand the market as well as items, the outcome is more positive than the result of previous 5 years The average Export and import quota every year reached 21.72 million USD, including 4.56 million USD of export and 17.16 million USD of import

Period 2001-2005: the period of performing the plan of 5 years in the beginning of

the century 21 the age of international economy integration and business performance of Company under the market mechanism and powerful competition, the Company took its efforts to find solutions aiming to have effective business, complete and exceed the assigned goals, the average Export and import quota every year reached 38.89 million USD, including 9.16 million USD of export and 24.73 million USD of import

Upon the official quantity of 50 years, total quotaof Company gained 2.956,75 million Rup and USD including 1.013,8 million R/USD of export, and 1.942,95 million R/USD of import

Period 2006 – 2009: It was shifted to the new period In 2006, the Company was

officially converted into Joint Stock Company Although it facedunfamiliarity with

new form of organization, the business performance of Company initially obtainpositive results The revenue of 2006 reached 563 billion dong, 914 billion dong in 2007, 1.367 billion dong in 2008 and over 2,000 billion dong in 2009

Period 2010 – 2012:Although it encountered a lot of difficulties due to the global

economic crisis, and limited approach of capital, the Company still gained the positive growth of revenue and profit The revenue of 2010 was 2.200 billion dong, and it was 2600 billion dong in 2011 and 3000 billion dong in 2012

Undergoing many historical periods of the country with many generations of experienced and skilled staff, TOCONTAP HANOI increasingly developed and stabilized all respects In different period, the business development of import and export items of TOCONTAP HANOI increased continuously and met the needs of economy

For nearly 60 operating years, the Company set up a business network with customers crossing 83 countries and territories nationwide The company was proud

of being one of the earliest import and export Company in Vietnam with the most experienced company in the field of import and export

In the commercial relation: the Company used many types: the import and export, processing, return, production by sample, joint venture, association

The Company wishes to develop the wholesale relationship with the near and far customers on spirit of equality and mutual benefits The company gave the customer who visit and work for the company a sincere thank and comprehensive cooperation

Always guarantee the commercial civilization, and create the reputation on the

market place with the sign "Prestige – Quality – Efficiency"as the motto of action

for Grocery Joint Stock Company

2.1.3 Organizational structure of company

2.1.4 Business Model of Vegetable Oil

BOARD OF SUPERVISOR

S

Hai Phong branch

HCMC branch

Department

of Account

Department

of Administrati

on Department

of Synthesis

BOARD OF DIRECTORS

General Director Deputy General Director

2.1.5 Process of vegetable oil

Based on the input material, we divide 2 production chains

If the material is oilseeds (domestic, import) such as soybeans, peanuts,

tamarind…will use the chain 1)

(Note of technique under the attached appendix – Appendix 01)

If the input material is refined oil (import or domestic production) will use the chain

2 to produce finished products

(Note of technique under the attached appendix – Appendix 02)

2.2 Internal factor evaluation of TOCONTAP

Graduates College Vocationalschool

Table 4.1 Personnel of TOCONTAP

Source: Business report of TOCONTAP

Through manyfluctuaiton of time and history, the change of corporate model and personnel of TOCONTAP in 2006 (time of privatization) was 120 people and 189 people in 2012 To gain the achievement as present, it is because TOCONTAP has

an experienced leadership and young and dynamic staff (over 85% below the age of 40), high qualificaiton (over 90% is the post-graduates and graduiates), has the experience in trade, with modern and formal working style, careful customer service under the provision agreed by TOCONTAP

In addition, the seasonal laboris regularly maintained in the production plant with

125 people The Company was and is encouraging the staffs of TOCONTAP to improve the kowledge, especially the export and import TOCONTAP tries to

reduce the staff with the immediate level down to the lowest rate

Policy of recruitment:

Over past time,TOCONTAPimproved the quality of resources, and the recruitment

of personnel was concerned appropriately TOCONTAP has an Admission

Council;theinformaiton on personnel recruitement was widely avertised and posted via internet The Examination Council has the involvement of departments in need

of personnel aiming to make it appropriate with the position of vacancy

However, there are priorities for the children of those who work for the company, or those who are introduced by the relatives That affects the quality and labor capacity

of TOCONTAP Therefore, it causes the case”surplus but shortage” of personnel in TOCONTAP

Training, appointment and encouragement

The development of human resources is shows that TOCONTAP regularly holds the training course, operational course and invites the domestic and foreign experts to the class;takes turn to appoint the staff to take part in the training course in the foreign country as well as regularly participate in the reference and foreign fair and exhibition

Although the policy in encouragement of TOCONTAP is implemented, the efficiency is not high; the reason is that the policy on encouragement is not significant and fair Especially, the salary and bonus mode of TOCONTAP consistency between the branch office and headquarters This has led to TOCONTAP lost some employees have higher qualifications in recent times

2.2.2 Management activity

Strategic Planning:

TOCONTAP’s leadership pays great attention to planning mission The company’s target is set based on the available capacity and anticipated market demand to propose strategy and business policy TOCONTAP always bases on specific plans

of each department of branches to set up business plans for the whole company, so the implementation result is very close to the plan and is little different from the plan, except for few unusual cases affected by objective factors

Management Organization:

Organizational Design: Since equitization, the company has changed the organizational structure to suit a large scale joint stock company However,

TOCONTAP still has not had some important functional departments (Legal Department, Research and Product Development Department, Customer Care Department)

Analysis, design, job specialization and job description: the company has had a specific job description for all positions, degree of specialization is high, but in some positions, functions and responsibilities are not united clearly, so these function have been changing constantly, which makes it difficult for departments to coordinate

The link between the functional departments of the head office and branches is not high, so there are some negative impacts on the operations of TOCONTAP over time

Leadership

Senior leadership belongs to TOCONTAP and branches have done quite well their function However, leaders of business branches need to consider many issues and suggest ways to overcome to improve efficient use of the company’s resources Some branch leaders have focused on looking for customers to increase revenue but have not controlled risks that can result in bad debts

Check and control:

Testing function of the company is quite well done The Company has built inspection department that includes people who are qualified and good-quality This department has performed well their function and duties in the inspection and testing of business processes across the company

2.2.3 Marketing activities

Marketing activities have appeared in Cambodian market since 2009, starting from trade fairs and promotional activities of products in this market Market penetration currently is mainly based on trade relations through investment opportunities between the two countries

Export system of TOCONTAP is done through Cambodian importers; they are in charge of customs clearance, delivery and payment Then importers select level-1

distributors in provinces of Cambodia Level-1 distributors in provinces select and sell directly to level-2distributors and then level-2distributors sell to consumers TOCONTAP supports advertising, performs stimulus and promotion programs through major importers in Cambodia However, TOCONTAP still do not have a stable marketing strategy to develop export of goods and commodities in general and oil in particular in Cambodian market

As the nature of the import and export payment between Vietnam and Cambodia is not internationalized like other markets (EU, U.S., Japan ), so exports in general and TOCONTAP in particular chooses the safest payment

method that is payment before shipping (payment first) There are some circumstances in which payment is done afterwards but it is applied for customer who have made long and reputable purchase process When goods come to Cambodian market, importers then are entirely responsible for the goods and the market, importers act as supporting consultants Therefore, the criteria for selectingCambodianimporters:

Clear legal status

Stable financial ability, in good relation with banks

Have extensive distribution network

Have good relation with tax, customs, and border authorities

Year Importers Level-1 distribution Level-2 distribution

Table 2.2 The development of TOCONTAP’s sales systems in Cambodia

2.2.4 Financial management activity

Accounting and financial department comply with accounting law and invoice regime

Perform reporting regime and monthly tax settlement with the Tax Department within the time allotted

In good relation with banks, prepare timely funding for the purchase with a reasonable interest rate; contribute to the efficiency in production and business activities

Manage, and use source of capital reasonably to improve the efficient use of capital, increase capital turnover, and minimize bank borrowing cost

Act as a counselor and recommend the Company’s Board of Directors to amend, build and issue documents related to saving and combating waste, reducing cost, lowering production cost

Perform periodic reporting regime, report financial documents within the time allotted by the Company

1 Arrange asset structure and

capital structure

Owner’s capital / total source of

capital

3 Profitability

3.2 Rate of return on total assets

Pre-tax profit margin on total

assets

After-tax rate of return on assets % 10.49 12.89 12.01

capital

Table 2.3 SOME targets to evaluate FINANCIAL SITUATION OF TOCONTAP IN CAMBODIA

Source: Report on business activity of TOCONTAP

Property structure: Due to the nature of the import-export business, fixed assets only account for a relatively low proportion of the total assets of the company (approximately 16-21% of the total assets of the company)

Capital structure: After more than 3 years of entry and operation, though TOCONTAP in Cambodia does not raise its capital, but the total source of capital is still rising every year; this shows TOCONTAP do business efficiently, its reputation

is increasingly improved, so the ability to ask for loans from banks is growing and they mainly are unsecured loans

Liquidity: The company is always able to control risks because of applying methods (LC, payment first) and reasonable sales withdrawal policy (attractive prices with discount)

Profitability: Though the rate of return index of TOCONTAP does not change significantly due to specific characteristics of the items, after-tax rate of return on owner’s capital is high

2.2.5 Information System

Deploy the application of information technology in the operation of departments, branches, factories: Regularly improve skill and level of using information technology tools in the computer system of departments, branches, factories Use link ADSL and accounting programs EFFECT, which facilitate the transmission of data, update and exchange of information