business strategy for bach viet food industries ltd in the period of 2014 2018

Additionally, the production freedom and market opportunities help Vietnam become one of the ten large export countries in the world on honey and honeybee's products.. From the above req

Global Advanced Master of Business Administration

BUSINESS STRATEGY FOR BACH VIET FOOD INDUSTRIES LTD IN THE PERIOD OF 2014 – 2018

Class Ga.MBA01.C0112 – Group 4

PHAM THI THU MINH

HA THI TU CHI

DOAN AI VY

TRAN VAN TIEN

ADKNOWLEDGEMENTS

Our team of the Group 4, the writers of this thesis, commit that this thesis of

"Building Business Strategy for Bach Viet Food Industries Ltd in the period

of 2014-2018" is our serious study The data and figures used in this writing are

honest, objective and suitable for the business practices We also get the permission and official confirmation of the Business Owner in the use of those data and figures Taking the advantages of this opportunity, we sincerely thank the Council members

of MBA Assessment program for your guidelines, comments and supports in the implementation of the thesis We also thank Bach Viet Food Industries’ Ltd leaders and management board for giving us favorable conditions and data supply for our thesis completion Another thank for Griggs University – America, Employment and Training Center - Ha Noi National University, lecturers in the program and classmates in the Ga.MBA01.C0112 for discussion, research, criticism on practices and theories during the course Special thanks for specialized consultants in honey production, friends, families of group members for continuous supports to finish this thesis

Once again, sincerely thanks for all

Ho Chi Minh City, September, 2013

Group 04 – Class GaMBA01.C0112

TABLE OF CONTENT

ACKNOWLEDGEMENT i

TABLE OF CONTENT ii

LIST OF MODEL – TABULATION v

INTRODUCTION 1

1 Purpose of statement: 1

2 Scope of research: 2

3 Goal and objective of research: 3

4 Research methodology: 3

5 Research meaning: 4

6 Research outline: 4

CHAPTER 1.FUNDAMENTAL THEORY OF BUSINESS STRATEGY 5

1.1 Over view about business strategy 5

1.1.1 Definition of business strategy 5

1.1.2 Roles of business strategy 6

1.1.3 Important note in business strategy administration 7

1.2 To build a business strategy 7

1.2.1 Business environment analysis 7

1.2.2 Internal Analysis 11

1.2.3 Analysis and selection of business strategy 13

CHAPTER 2.CURRENT STATUS OF BUSINESS OPERATION OF BACH VIET FOOD INDUSTRIES LTD 21

2.1 About the company: 21

2.1.1 Overview: 21

2.1.2 Establishment and development: 22

2.1.3 Organizational Structure: 23

2.1.4 Introduction about honey production and consumption situation of the company: 24

2.1.5 Clients and Partners 26

2.1.6 Business performance in the recent years 27

2.2 Impact factors from external environment 25

2.2.1 Analys macro factors effecting to company operation 25

2.2.2 Honey bee production environment analysis 29

2.2.3 Main domestic competititors analysis 33

2.2.4 Main foreign competitors analysis 38

2.3 Internal environment analys 41

2.3.1 Operation and management 42

2.3.2 Employee, product, product quality 42

2.3.3 Product process, equipment, technology of factory 44

2.3.4 Marketing and customer relationship management: 45

2.3.5 Accounting and finance 46

2.3.6 Information system and risk management 52

2.3.7 Core competitive advantages 53

2.3.8 Internal Factor Evaluation matrix 54

2.4 Honey market and the company capability 55

CHAPTER 3.BUSINESS STRATEGY FOR BACH VIET FOOD INDUSTRIES LTD IN THE PERIOD OF 2014 – 2018 60

3.1 Development orientation of honey production 60

3.1.1 Bee honey business global market: 60

3.1.2 Bee honey business in Viet Nam 61

3.2 Company goal in 2014 – 2018 62

3.2.1 Mission and vision: 62

3.2.2 Annual business plan: 62

3.2.3 Branding Bach Viet to 2018 60

3.3 Matrix for strategy evaluation and selection 60

3.3.1 SWOT Matrix: 61

3.3.2Matrix of Business Strategy Positioning (SPACE): 62

3.3.3 Preliminary Selection of Strategic 67

3.3.4 Quantitative Strategic Planning Matrix (QSPM) 68

3.3.5 Select business strategy: 72

3.4 Organization, solutions to apply strategies 74

3.4.1 Market penetration strategy 70

3.4.2 Market Development Strategy: 78

3.4.3 Horizontal integration strategy: 82

RECOMMENDATIONS – CONCLUSION 79 REFERENCES a

2 OPINION’ EXPERTS SURVEY FORM c

LIST OF MODEL – TABULATION

Chart 1.1 The interaction among levels of environment 8

Chart 1.2 The 5 competitive forces model 9

Chart 1.3: Effects of micro environment and industrial environment on honey producing and trading 11

Chart 1.4: SWOT Matrix 17

Chart 1.5: The SPACE matrix 18

Chart 1.6: Q.S.P.M matrix 19

Picture 2.7: The Company’s logo 21

Chart 2.8: Organizational Structure Management 23

Chart 2.9: External Factor Evaluation Matrix 35

Chart 2.10: Competitive profile matrix – domestic companies 39

Chart 2.11: Competitor profile matrix – foreign companies 42

Chart 2.12: General process of produced honey 47

Chart 2.13: Process of impurities filter and separation 47

Table 2.14: Yearly total assets of the company 50

Table 2.15: Yearly general capital of the company 51

Table 2.16: Yearly business result of the company 51

Table 2.17: Yearly cash flow of the company 53

Table 2.18: Financial indicator through years 54

Table 2.19: Internal Factor Evaluation Matrix 57

Table 3.20: SWOT matrix 65

Table 3.21: SPACE Matrix of Bach Viet Company 67

Table 3.22: QSPM Matrix of 1st strategy group 70

Table 3.23: QSPM Matrix of 2nd strategy group 72 CONCLUSIONS - SOLUTIONS: Table: priorities in the selected strategies

INTRODUCTION

1 Purpose of statement

Honeybee growth, the production and process of honey and honeybee's products are one of high-valued economic sectors in Vietnam where is still an agricultural country The very large labor force in this sector, the favorable natural conditions for production and the big domestic and foreign consuming markets make it a potential economy for the high incomes contributing to the GDP Especially, in the difficult stages of 1990s and recent years, honeybee growth and production have still been developing Additionally, the production freedom and market opportunities help Vietnam become one of the ten large export countries in the world on honey and honeybee's products

However, the economic value of this sector is still low mainly because of the export and sale of new materials through the raw process to other productions or the low quality of products which fails in creating added values from the production to consumption The development of food process industries is still low and the advantages of inputs cannot be used as well as there are no effective business strategies Hence, how to use the inputs of honeybee production in cheap prices to produce unique, high quality products aiming at adding values, developing and competing in the market mechanism is an important problem for the economy in general and the seekers of business opportunities in particular

As the economy develops, physical and mental demands increase, consumers' attitudes with traditional useful products such as honey and honeybee's products are expressed significantly The Vietnamese widely integrated economy brings a lot of opportunities for vietnamese enterprises in exporting products but big challenges also The clearest one is that the business globalization in the economy of liberalization becomes more diversified and complicated Moreover, since 2014, as WTO's regulations, Vietnam has to widen the policies for the foreign invested

companies, with strength on capitals and technologies to be liberalized in the investment of many fields, strictly increasing the pressure of competition

For the sustainable competition and development in the market, Vietnamese enterprises are required to make continuous efforts in product quality improvement, cost and price reduction, more effective promotion and marketing especially, the most important thing is to identify and choose for the company a right "Business strategy" which is suitable for the capacity, market and strategic vision in the long term This Business Strategy must be built on the basis of real market analysis in a sufficient and scientific way, which recognizes company's strength and weakness as well as matches the macro-economy environment, development direction of the sector in the economy and other geographical and social aspects moreover, taking the opportunities and minimizing possible risks are required

From the above requirements in real and knowledge on Business Administration in MBA program, Griggs University (America), our group with 04 members including

02 members of family relationship with the selected company for the research therefore having certain understanding on the company and its products, and 02 members working in the Commercial Bank and Real Estate has made decision to

choose the topic of "Building Business Strategies for Bach Viet Food Industries Ltd in the period of 2014-2018" as our final capstone project report in this course

2 Scope of research

 Research objects: Issues related to planning the Business strategy (Building the strategy, planning, sorting out the solutions for the strategy implementation), in which, the thesis provides an analysis of theoretical basis in line with operational realities of the sector, market and enterprise, then delivers a specific business strategy for Bach Viet Food Technologies Industries Ltd in the period of 2014-

2018

 Research scope: Bach Viet Industries has been currently producing one kind of product which is processed honeybee food including honey and some other

honeybee products Therefore its business guarantees as a SBU (Strategic Business Unit) This thesis focuses Bach Viet's activities in domestic market and exports to some countries such as USA, Japan, EU The process of analysis and strategy building include the comparison and checking with the big rivals in the Honeybee Production sector of the market

3 Goal and objective of research

- The research targets of this thesis are to focus steps of strategy building process,

to systematize theoretical knowledge on planning business strategies, then to use

as a basis for preparing the business strategy for the company to research appropriately This thesis will focus on the basic studying issues as follows:

 Theoretical basis on business strategy, management of business management

in operation of some enterprises Basic procedure for building and management of business strategy

 Assessment on internal and external environment, current business situations

of Bach Viet Industries, withdrawing shortcomings and strengths, opportunities and challenges effecting company business activities in the past years and 3 recent years

- Throughout targets of this research are to build an effective business strategy for Bach Viet Food Technologies Industries, including possible solutions and recommendations to the company for the successful application of the business strategy in the period of 2014-2018

4 Research methodology

In our research process, we have used some basic studying methods as follows:

- Data collection method: Using general and detailed figures provided by Bach Viet; Referring in materials, magazines, websites on Honeybee sector and statistic figures Collect information through the interview method with the Enterprise owner, managers, workers, suppliers, consumers, distributors and

consulting methods with some individuals and colleagues who are keen on honeybee production and business

- Data solving method: Using the method of modeling, causal analysis, and descriptive statistics in analysis of business activities' results incorporated the method of administration subjects

- Method of quantitive analysis based on data results, survey and collection data and the use of statistical tools for analysis

- Expert method via communication and discussion with specialized experts for assessment and comments to the research

- General analysis method based on matrix tools and popular strategic analysis models such as CPM, EFE, IFE, SWOT, SPACE, QSPM

5 Research meaning

With the company's internal existing conditions and market potentials, this research does not help Bach Viet Industries to plan its own business strategy only but overcome its shortcomings, promote the business opportunities for the competition and penetration to the old markets, development of the new one aiming at gaining growth and profits

6 Research outline

Beside introduction, suggestions, solutions, reference…, the thesis including 3 chapters as below:

 Chapter 1: Fundamental theory of business strategy

 Chapter 2: Current status os business operation of Bach Viet food industries ltd

 Chapter 3: Business strategy for Bach Viet food industries ltd in the period

of 2014-2018

CHAPTER 1 FUNDAMENTAL THEORY OF BUSINESS STRATEGY 1.1 Over view about business strategy

1.1.1 Definition of business strategy

 There are many definitions about business strategy which consider it as art

to compete in the market and to develop the business:

- Strategy is maquette of targets and plans to get the targets (Kenneth, 1965);

- Quinn (1980): Strategy is pattern or plan to integrate main targets, policies and chain of action into one unit with close structure;

- Strategy and making a unique, valuable position is inclusive of making the difference, bringing more choices to concentrate the power to create the advantage of the company (Michael Porter)

 From angles of administration, strategy is a kind of plan :

- G Arlleret wrote "Strategy is determining the way and mean to get the target through policies";

- D Bizrell and partners wrote "Strategy is a general plan which leads the company to desired targets It is a base for making the policies and method of operation";

- Gluecl wrote: "Strategy is a kind of united and all-sided plan which is

designed to guarantee that all of the targets will be realized”

 From angles of unity:

- “Strategy is an art of co-ordinate and control the activities to get the long-term target of the company”;

- According to Chandler, strategy is including setting basic, long-term targets of the company and choosing the way to dispose the power to realize the targets

From the angles above, we can see that the difference between business strategy and business plan is competitive advantages by taking use of core ability of the company From the reality we can see that every company must have business

strategy because a penetrative business strategy will guarantee the advantage of the company in comparison with others in the market

1.1.2 Roles of business strategy

- Business strategy helps the company determine its targets which is a base for all

of the activities of the company

- Business strategy help the company catch and take use of all chance in the market as well as bringing method to overcome risks in the competitive market

- Business strategy helps the company to use the man power more effectively which will bring stable development of the company

- Business strategy creating stable foundation for providing policies and decision which is suitable to changes of the market

Therefore, business strategy takes an important part in the success or lost in business of a company

1.1.3 Important notes in business strategy administration

Advantages:

- The process of administrating strategy help the company see clearly the target and its direction, base on which, administrators can consider and determine the way to reach targets

- The condition of business environment is changeable The fast changes always create chance and sudden Strategy administration helps administrator foresee and take use of chance and challenge The processes of strategy administration make administrators analyze and forecast the condition in far future which will help them catch and take use of chance, minimize the risk in term of environment

- Thanks to strategy administration, a company will link decisions with environmental condition which will make them more active in all decisions The companies that don't use strategy administration often make decision passively The decision, sometimes, brings good result, however, it doesn't help the companies to catch up with the change of environment and control it

- Many researches show that the company that has strategy administration will have better result However, this doesn't mean that the company using strategy administration won't meet the difficulty The key is that it will help to minimize the risk when they meet difficulty

Disadvantages:

- It takes a lot of time and effort to build the strategy and administration However, once the company experienced the process of strategy administration

it will save a lot of time

- Action plans somehow will be considered as being created inflexibly in written without timely adjustment

- The shortcomings in forecasting sometimes will be made

- Some administrators doubt on the use and feasibility of strategy administration However, the problem is not at the strategy administration but at the person who use it Obviously, companies must implement the entire plan, not just give out the plan and let it be

1.2 To build a business strategy

1.2.1 Business environment analysis

Analyzing the business environment is a process that strategy-makers check all of environmental elements The purpose of environmental analyzing and judgment is determined chances and risks Analyzing macroscopic and microcosmic environment - also called as "branch environment" There are many levels of analyzing business environment The interaction among levels of environment is illustrated in the chart 1.1

Chart 1.1 The interaction among levels of environment

1.2.1.1 Macro environment analysis

a Environment of Government, Law and Politics

Government, law and politics act on business in different angles They can creat opportunities or obstacles, even risks for business such as: the stable of politics, changes of policy, decisions of tax and fee, labour law, union…

b Environment of economics:

Economics status and trend impact on the success and business strategy of enterprise Key elements that many companies analyse are the growth speed of economics, rate, exchange rate and inflation rate…

c Environment of culture and sociaty

In the medium and long term, this may be the biggest changed element Enterprise must consider some factors as the come of new life style, consumer behavior, change of population age, marital rate and born, immigration…

d Environment of technology:

The change of technology obviously effects to the life cycle of product or service Moreover, this will effect on product methodology, material as well as labour behavior Hence, administrator is requested to concern on change and invests for technology and product improvement

e Environment of nature

Wise strategist usually pays attention to climatic and ecological environment Trends of natural environment as the rapid exhaustion of the natural resources, pollution increased, global changes in climate, food safe… create dangers to some business but also opportunities for some others This required strategist always considers every matter carefully

f Environment of globalization

Globalization is an obvious trend that all enterprises, fields and governments must

be awared of Strategists now call “the big house” In this scenario, international environment is a special case of general external environment of enterprises However, it would be more complicated, compete differently because of different views about society, culture, structure, policy and economy…

1.2.1.2 Industrial environment analysis

Strategists have to analyze and predict competitors in the industry to define opportunities and threats of business

M Porter created the 5 forces analyze that can help:

Chart 1.2 The 5 competitive forces model

a Current competitors analyze

The first force in this model is the size of a product field, including: competitive structure, demand situation and output barrier

b Potential competition analyze

The second force is potential competitors, they are enterprises that currently not compete in the same industry but they have ability if they choose to enter the industry The advantage and disadvantage level for the industry entrance depend mostly on the entrance barrier

c Supplier pressure analyze

The third force is the ability to bargain of suppliers In some aspects, threats from suppiers create dependence to enterprises

d Client pressure analyze

This force creates “bargain capacity” for buyers Buyes are the end users, distributors (whole sale or retail) and buy product to use as input for production

e Threat from substitute products analyze

The last force in M.Portet model is threats from substitute products – another product that can meet the demand of customers – which basic feature has some outstanding advantages than the current product Threats from this require enterprises to analyze and keep an eye on technical changes or improvements and renew products Changes from the need of market are also a key factor caused these threats

Chart 1.3: Effects of micro environment and industrial environment on honey

producing and trading

1.2.2 Internal Analysis

The objective of internal analysis and evaluation is to study what belongs business itself, has a direct or indirect impact to business activities, which are the strengths and weaknesses of the business It was created with the purpose of creating basis information for strategic planning in business management strategy, but objects we consider in this analysis is about control of business, different from external environment Hence, pointed out strengths and weaknesses of each side, each field

as a basis for formulating business strategies

Internal analysis conducted by different approaches One common approach is to analyze the internal enterprise in the field of corporate governance

1.2.2.1 Evaluation of Marketing

The term marketing refers to the processes, functions, exchange and activities geared towards creating value by meeting the needs of the market Marketing brings customers closer to busines, products to make a purchase decision and create favorable conditions for the sales activities of the business

1.2.2.2 Evaluation of financial – accounting

a Analysis of general financial status through Financial Statements

Analysis of the financial statements is related to using information to have full understanding about the company The financial statements can be regarded as a vivid picture and clarity on the financial situation of the company

- Consolidated Balance Sheet is financial statements reflects the assets and liability of the business a time in the business process

- The operating result is a summary of the income of the business during the accounting period (usually a year), it indicates the profit allocated to stakeholders of the business now such as the creditor, state, preference shareholders, our shareholders and all other resources

- Cash flow statements reflecta the impact of business activities to cash flow in and out of an accounting period In other words, it is reported revenues in a fund accounting period, it says the cash position of the business represented by the amount of money raised and used in the operation of the business, from which said Ending cash balance

b Financial Analysis through Financial Indicators

The financial statements together indicate general financial position of the business from time to time or in a period of activity However, in order to better understand the financial performance and appreciate the power and value of the business, it is necessary to conduct analysis of financial indicators Financial indicators were designed to quantitatively evaluate all the different aspects of the financial operations of the business

The goal of financial management is to gether with the different functional activities strive to maximize the value of business So, the first question that the analysis should answer is whether the business profitable or not and how level? Profitability

is the end result of a series of policy and decisions proposed and implemented by managers These indicators evaluate the coordination of assets and capital management activities of company

1.2.2.3 Evaluation of corporate management and governance

Corporate management and governance is the process of planning, designing, operating and monitoring the organization and supervision of the production system

in order to implement the business objectives The task of governance is to design and organize business systems that transform inputs into output elements after each variable progress

1.2.2.4 Assessment of human resources management

Human Resource Management is a system of philosophy, policy and operational functions in attracting, training - development and maintenance labour for organization to achieve optimal results for both the organization and the member

We can divide the major activities of the human resource management function into three major groups as follows:

- Attract human resources This group functions focus to ensure a sufficient number of qualified staff that meet the business requirements

- Training and development This group functions focus on building capability for staff, ensuring that they are qualified and have necessary skills to complete assigned tasks and support staff to maximize invidual abilities

- Maintenance human resources: This group functions focus on maintenance and effectively use of human resources in the enterprise Group functions includes two smaller functions that are stimulate, motivate employees and to maintain and develop good working relationships in the beauty business

1.2.3 Analysis and selection of business strategy

1.2.3.1 Technical analysis-oriented business strategy

a Competitive Profile Matrix (CPM)

Competitive Profile Matrix (CPM) to compare company and competitors, mainly based on the factors affecting the competitiveness of enterprises in the industry, thereby helping managers recognize strengths and weaknesses of the business as well as competitors in order to determine a competitive advantage for enterprises

and weaknesses that need to be addressed There are 5 steps to follow to build CPM

as below:

o Step 1: Make a list of 10 factors that critically influence to the competitiveness

of firms in the industry

o Step 2: Sort the importance (propotion) from 0.0 (not important) to 1.0 (very important) to each factor This classification shows the relative importance of each factor depends on the level of the factors affecting the competitiveness of enterprises in the industry, but the total importance of all these factors must equal to 1.0

o Step 3: Determine the evaluation, ranking from 1 to 4 for each factor, the ranking of each factor depends on the ability of businesses to respond to the elements, in which 4 is good, 3 is above average, 2 is average and 1 is weak

o Step 4: Multiply the importance of each factor with its assess and rating to determine the score of factors

o Step 5: Plus score of all the factors to determine the total score of matrices Compare the total score of enterprises with major competitors in the industry to evaluate the competitiveness of enterprises selected from rivals

b External Factor Evaluation Matrix (EFE)

External Factor Evaluation Matrix (EFE) allows strategists summarize and evaluate

the impact of the information economy, society, culture, demography, geography, politics, government, law, technology and competition There are five steps to developing an evaluation matrix of external factors:

o Step 1: Make a list of elements from 10 to 20 opportunity and risk mainly play decisive roles for the business success that being identified through the research

of external information

o Step 2: Sort out the importance (propotion) from 0.0 (not important) to 1.0 (very important) to each factor This classification shows the relative importance of the factors to the business success, but the total importance of all the factors must equal to 1.0

o Step 3: grade for of determinant of success, rank from 1 to 4 for the possibility that the current strategy of the business may response, which 4 is good response,

3 is above average response, 2 is average response and 1 is weak response

o Step 4: Multiply the importance of each factor for its classification to determine score of importance for each factor

o Step 5: Plus all points of elements to have the total score of matrix If total score

is below 2.5 points then the company is weak at internal resources, if the score is above 2.5 then the company has strong internal resources

c Internal Factor Evaluation Matrix (IFE)

This tool is used to summarize and evaluate the strengths and weaknesses of the important business function in the company it also provides a basis information to identify and assess the relationship between these functional units IFE Matrix can

be developed in five steps:

o Step 1: Make a list of element from 10 to 20 in order, starts from the strengths to weaknesses of the internal forces that affecting to business development

o Step 2: Set the importance 0.0 (not important) to 1.0 (very important) to each factor The importance assigned to each factor given that the relative importance

of that factor to the success of businesses in the industry Excluding major is the strength or weakness, all factors that have greatest impact on the performance of the business must be consider as the most important But the total score must be 1.0

o Step 3: grade 3 or 4 for each key factor impact directly to the success, 1 to 2 points for each weakness factor This classification shows how the current strategy of the business response to these factors In which 4, 2 is good and 3, 1

is weak and not good at reaction

o Step 4: Multiply the importance (porpotion) of each factor with its classification

to determine the grade of each factor’s importance

o Step 5: Add up all elements’ point to determine the critical point of the matrix If the total score exceeds 2.5 competitiveness of enterprises is above average

strength and vice versa if the total scores below 2.5, the competitiveness is below average

1.2.3.2 Business strategy choice

a SWOT Matrix

This is a tool for analysis, formulation and strategic choice, the revised strategy, review and evaluates the position and orientation of a business or a business plan SWOT analysis can be used for all kinds of decisions and SWOT template enables thinking positively, beyound the habit or instinct

SWOT matrix is used to list all the opportunities, threats, strengths and weaknesses within the enterprise, in order and proper position Based on the relationship between these factors, the analysis will be conducted to select appropriate solutions through strategic combinations: strengths-opportunities (SO), strengths-risk (ST) and weaknesses-risk (WT) and weaknesses-opportunities (WO) This method is very simple, easy to apply and can be used in many areas of business activity SWOT presents 4 basic strategy groups

SO: The constitution is based on the strategy of the business strengths to exploit outside opportunities

ST: The strategy is based on the strengths of the business in order to prevent or limit the risk from outside

WO: The weakness of this strategy reduced internally to take advantage of external opportunities

WT: The weakness of this strategy reduced internally to prevent or limit the external risk

The experienced administrators never consider all feasible strategies beneficial to the company because there are many possible solutions and ways to implement these strategies Therefore, only a set of the most attractive strategic options is used for development There are 8 steps to make a SWOT matrix:

1) List the opportunities outside the company

2) List the critical threat outside the company

3) List the major strengths of the company

4) List the weaknesses within the company

5) Combine the strengths of the external opportunities, the result of SO strategy

in the appropriate box

6) Combine internal weaknesses with external opportunities, making strategic

WO result in the appropriate box

7) Combine the strengths of the external threat, the result of appropriate strategies in ST

8) Combine internal weaknesses with external risk; put the result of WT strategies appropriate box

Strategy S-T

Strategic use of corporate strength to cope, to avoid external threats

Strategy W-T

Strategies to overcome weaknesses of the business to reduce external threats

Chart 1.4: SWOT Matrix

b SPACE Matrix

This is the defining tool, help businesses define business strategy SPACE Matrix for information analyzed in the period, including two within factors: financial strength (FS) and competitive advantage (CA), two external factors: environmental stability (ES) and the strength of the sector (IS) The matrix includes 6 steps:

- Step 1: Select a set of variables representing FS, CA, ES and IS

- Step 2: Assign values from 1 (worst) to 6 (best) for FS and IS, from -1 (best)

to -6 (worst) to ES and CA

- Step 3: Calculate the average score for FS, IS, ES and CA

- Step 4: Check the average score for each aspect

- Step 5: Plus 2 points on the horizontal axis and mark results, plus two points

on the vertical axis and check the results Mark the coordinates of the new point

- Step 6: Draw the vector directed from the origin to the new location, the direction vector of the box from which is to locate the appropriate group strategy of the business

QSPM is a tool used to quantify the information has been analyzed in the first phase which allows administrators to select the optimal strategy; QSPM matrix includes 6 basic steps:

Step 1: List opportunities and threats from the outside and big weaknesses, significant strengths within the enterprise

Cautious strategy Attack Strategy

Defense strategy

Competitive Strategy

Step 2: Classify (weights) for each critical success factors inside and outside, the same classification as the EFE Matrix, IFE Matrix The total weight of the external factors of 1.0 and the total weight for the internal factor is 1.0

Step 3: Identify alternative strategies that can be considered to use from SWOT matrix, SPACE

Step 4: Determine the number of points for each strategy Number of points denotes the relative attractiveness of each strategy compared to other strategies, assessment scale from 1 to 4 where 1 is not attractive, the attractive low 2, 3 is quite attractive ,

4 is very attractive

Step 5: Calculate the total number of attractions, this is the result of the classification score (step 2) the number of points (step 4) in each row The higher score of attractions higher the more attractive strategy

Step 6: Plus number of attractions It is the sum of total number of points in the column of the QSPM strategy The difference between the total number of and points in a strategy group, the higher score indicates the more attractive strategy

No The important factor Proportion

Strategy can replace Strategy 1 Strategy 2 Strategy (n)

AS TAS AS TAS AS TAS

Through the fundamental theory of strategic business analysis and sequencing logic

to build a business strategy, we can visualize the process from the start to form a business strategy overall through 03 stages as follows:

STAGE 1: STAGE OF ENTRANCE

STAGE 2: STAGE OF COMBINATION

STAGE 3: STAGE OF DECISION

QSPM - Choose the implementation strategy

CHAPTER 2 CURRENT STATUS OF BUSINESS OPERATION OF

BACH VIET FOOD INDUSTRIES LTD

Picture 2.7: The company’sCompany’s logo 2.1 About the company:

2.1.1 Overview:

- Company Name: Engineering Company Limited Bach Viet food

- Trade name: Bachvietfood Industries Company Limited

- Head Office: 94/5 Tran Khac Chan, Ward 9, Phu Nhuan District, Ho Chi Minh City

- Tel: (84.8) 38,478,276, Fax: (84.8) 39,955,143

- Website: www.bachvietfood.com; Email: smcuong@bachvietfood.com.vn

- Business activities: Manufacturing and processing food (honey, coffee, canned fruits and vegetables of all kinds), design machine and manufacture specialized food processing

- Ownership of company: Limited Liability Company

- Capital: 2,000,000,000 VND, in which owners are family member

- The number of regular employees: 53, seasonal workers about 15

- With logo "Vietnam Bach" meaning desired long-term development Company hundred years and stable career as cypress, two continuous bile flow, in feng shui oriental brown beneath the earth (the earth is platform), on a yellow metal (achievement), soil born metal, meaning operating principle of the company is to build a solid foundation to reach the top

2.1.2 Establishment and development:

- The owner of the company started out as a professional research and manufacturing machinery in the field of food processing technology He has had more time to work for a number of food processing companies in France, Germany and is still consultant for a number of large domestic enterprises as Vinamilk; Vinacafe

- In 2008, he heard a friend's business in the field of export honey to the European countries and United States complained that the returned exported product is too much because they did’nt meet the technical standard, even the company import very expensive purification machine and equipment

- He accepted to reseach fabrication machinery refine antibiotics and reduce moisture in honey for his friend After 6 months of study and successfully tested,

in early 2009 he shipped 50 kg of honey for his friend’s company to introduced

to the partners The results were pleasing chronic, honey production met the most rigorous standards, most difficult of the U.S importers

- In the same year 7/2009 he established Bach Viet food industries Ltd At the same time, the company has invested equipment for honey production lines, changed processing technologies in line with the general trend of the industry and the requirements of the specification honey for export

- In 2011, the company has invested near 5 billion to expand factory in Hoc Mon district and applying modern processes on a large scale and has always been closely examined by skillfulstaff, directly trained by business owners

- Today honey product of Bach Viet is well-known not only in Vietnam but also over the world with the slogan “the purity of nature” The company also joins in some particular activities such as:

- Participating in the demonstration of honey quality control;

- Organize workshops and seminars to introduce products to importers, distributors in the country;

- Participate in the good consumer exhibitions

Technical research products

Materials & products Store

The station buys fresh honey

Sales Department

2.1.4 Introduction about honey production and consumption situation of the company

- Honey: from the bee sucking from the ovary of a flower (nectar) or from a number of young leaves (leaf density), which has two main sugars: fructose, glucose and water, then water evaporation to form honey Honey is easy to use, convenient, and there are many uses for health, human life has been proven from thousands of old until now, such as:

 Nutrition, beauty: Additional energy, nourish the body, reduce fatigue, skin beauty, hair

 Curing: Taking antibiotics against infections, diseases of the stomach, ulcers, burns, anemia, high blood pressure, weak heart, digestive system cleansing, sedation, treatment of cough, colds, sore throat

- The production and consumption of products of the company:

 From 2010 to date, the average production companies and consumed each year from 400 -500 tons of honey products In addition the company has successfully produced tests some honeybee products such as jelly, cream, Pollen despite many offers and requests from distributors, company is still focused on investment is the main product of honey

 In general, The Company’s products have a short time of inventory due to good distribution channel management On average, about 80-90% of the annual production is exported to the U.S, Japan The remain products are distributed inside the country through 5 intermediate distribution business with their stores, not yet sold through in supermarket

 Some pictures of the honey products company Bach Viet:

Honey P08 - 227g

2.1.5 Clients and Partners

2.1.5.1 Client

- Domestic: the company has distribution network include 5 business with distribution system: JSC Long Bao - Hai Phong; Vimat Corp Ltd – Hanoi; Ta xanh – Hanoi; Phong Son Ltd - Bao Loc (Lam Dong); Huy Hoang Company - Binh Thanh District (HCMC) The company's clients are mainly level 1 distributor agents: they distribute product of company and some other companies’ products However, the selling price is set by Bach Viet and the company monitores selling price Every year domestic distribution channels accounted for approximately 15% of the company revenues but accounted for nearly 20% profit on products

- Foreign country: the company exports directly to foreign importers to distribute products to the U.S, Japan market, includes Allied International Corp - USA, Kondo Honey factory - Japan and Safra International - Dubai, UAE

2.1.5.2 Partners

- Bach Viet is a member of the 01 leading exporters of the association’s honeybees Vietnam that has 25 members The company usually participate in forums to exchange experiences, technical production, impurity separation processes, lower humidity with other companies in the association and technical guidance rearing, care for the bee

- Partners provide raw honey for the company include: the Central Highlands (buying station in Bao Loc - Lam Dong), South East Region (buying station in Dinh Quan Dong Nai), the Southwest Region (purchasing station in Can Tho City)

- The partners provide materials, packaging such as: Anh Nhiên Company Ltd - Hoc Mon, Ho Chi Minh City; Đô Thành Company, District 6, Ho Chi Minh City; Nam Hải Company, Distrist 4, HCMC; Li Meng ltd, Tan Binh Ho Chi Minh City; Thien Phu Si Co Ltd, Binh Thanh District, Ho Chi Minh City; Viet Hai Co., BA Le Chan Distrist, Hai Phong City; MT Gas Co., Ben Luc, Long An

2.1.6 Business performance in the recent years

(Unit: million dong) Target/year 2010 2011 2012 first half 2013 (estimate)

Net revenue 6.686.000 10.678.000 16.325.000 7.262.000

Cost of good sold 6.284.000 10.064.000 15.152.000 6.702.000

Before tax Profit 192.000 280.000 573.000 260.000

After tax Profit 144.000 210.000 430.000 195.000

2.2 Impact factors from external environment

2.2.1 Analys macro factors effecting to company operation

2.2.1.1 Law & politics

- Vietnam politics is stable and this is a favorable condition for production and business activities, export enterprises

- For many years, the Vietnamese government applies multilateral, cooperative diversity policies that focused on opening up the economy, international economic cooperation, enhanced marketing goods to markets outside and thanks for that companies can expand their production outside Vietnam, creating new sources of revenue from exports

- Agriculture is a prime sector to be developed and protected in Vietnam, in order

to provide many jobs, ensure the life of the working people Honey bee production is an industry that adds value and brings high income in rural areas

- Vietnam legal system still in the process of completion Therefore, changes in policy or law enforcement agencies if not effective will influence many business activities of the company, especially in the export sector

- Laws and regulations for trademarks protection in the territory of Vietnam was loose, business has to face with the risk of infringement of trademark

- Market Vietnam honey production is not strictly managed Standards of facility

to establish factory still loose, lack of safety caused more damage to consumers

as well as producers

2.2.1.2 Economic factors:

- In recent years, economic growth in Vietnam has continued to increase Per capita income increased stability, increased demand for goods From 2011 the government said that the task of curbing inflation, stabilizing macro-economy, ensuring social security have achieved positive results Notably inflation is declining; exports continue to achieve high growth rates, interest rates have continued to trend down

- The world economy is facing huge difficulties that impact negatively on the Vietnam economy On the domestic macroeconomic is unstable, inflation remains high, production output is congested, large inventory To handle this situation, the Government has implemented monetary policy - fiscal closely; improve the efficiency of investment, export promotion, import controlled to reduce the deficit, improve production efficiency Convert business focused on changing business model based on the application of advanced science and technology to improve the productivity of social labor, increase the competitiveness of products and the economy

- The labor cost in Vietnam is relatively cheap compared to other countries in the region

- Source of raw materials for the production of pure honey is affected by the use

of pesticides in agriculture, lack of control, increasing the residual impurities in the raw honey lead to refining, pure honey processing increasingly more complex and difficult

- Vietnam became a member of WTO, trade barriers have been reduced The foreign companies with advantages in capital and technology will enter the market as honey production and profit share of the domestic company will be affected significantly

- Vietnam's economy is considered to be one of the economies with high growth rate, it is associated with industrialization, urbanization, changing the structure

of agricultural crops will be converted purposes used to build factories, infrastructure, industrial directly affects the production of raw honey

- The unfavorable changes of weather, climate and the material make the cost of the company increased The company will also pay more for the cost of finding and maintaining the cleaning materials as well as transportation costs to rising production costs, the company's profit will be reduced, while importers foreigners often very difficult to increase the price increasing matter

- Over 80% of honey sold to foreign country so the exchange rates on the market will also affect the operations and profitability of the Company

- VietNam Dong interest rates are still high and difficult to reach the company also makes it difficult to raise capital to expand production and regional construction materials

2.2.1.3 Cuture, society factors

- Though not the essential needs of human beings, honey is a traditional food product to foster health and healing means for Vietnam and many countries around the world In recent years, thanks to information and communication systems easy promotion, items produced from honey bees are well known and much preferred

- Economic growth, rising incomes have much influence on the consciousness of the customer, they have turned to the use and preferred food quality and safety, especially also by the body and have the treatment effects in daily life

- Due to custom factors, the demand for honey in the importing countries is very different For example, Asian countries (such as Japan, Vietnam ) prefer honey amber, honey is drawn from the pistil, the Middle East, the countries do not distinguish colors, but like with high density of sweetness in processed foods; U.S and EU privacy prefer dark brown, honey is smoking from young leaves, containing high trace elements

- Geography Vietnam stretches from north to south with an area of many plant species, flowers, various leaves are favorable to the company diversified products suit the diverse needs of each segment goods

- The cultivation and harvesting raw honey is difficult during the rainy season but the weather changes our country is complicated to provide market inputs unstable and storage costs of materials must always maintain a large amount

- Natural bee keeping methods, do not understand the science of bee farming households to yield low density, high cost and lack of guaranteed quality

- The phenomenon of making fake honey or honey imports of poor quality from other countries for processing and labeling honey plays Vietnam appeared in the market affect the credibility of the true production and affect the health of consumers

2.2.1.4 Technology factors

- The easy access and apply modern automatic technology chain in production and business activities, handle the material with new technology, scientific arrangement of the stages in the production process help companies reduce costs, improve productivity and product quality

- The rapid development of information technology and communication make the company have more efficient tools to promote products, image, as well as capture information about the market, competitors’ competition, anticipated consumption situation, price to give out a reasonable price policy

2.2.2 Honey bee production environment analysis

- Production of honey in Vietnam during recent years continuous increases from the expansion of businesses in the industry, more and more new bee farm produce processing enterprises established Total production of honey of Vietnam (according to the Vietnam Association of bees) in 2012 was about 40 thousand tons, since 2009 to 2012 the average production increased from 7-9 thousand tons per year The highlight is that more than 90% of the honey produced in Vietnam gathered at the 25 member companies of Vietnam

Association of honeybees At the same time, 80% of Vietnam's honey is exported abroad

- From 2009 to now, Vietnam is always a big exporter of honey in the top 10 exporting honey countries Particularly, in 2012 with the average price of honey 2.400USD/ton, Vietnam export total over 32 thousand tons, exports reached U.S

$ 76.8 million

- Honey export markets mainly in Vietnam until 2012 is the United States (70% of exports), the EU, Japan and some countries in the Middle East, Africa, with smaller numbers According to a survey of a honey export businesses, honey production in Vietnam demonstrates high season, up in the dry season (November to April) and then decreased in rainy season (May to October)

- Using the model of 5 competitive pressures of Michael Porter, we analyze the competitive environment of Bach Viet Company as follows:

2.2.2.1 Pressure from potential competitors

- Requirement to establish a honey factory is not difficult Besides, Vietnam market of honey product is also attractive due to the potential development of large-capacity domestic production is still small (average 30-40 thousand tons / year) compared with natural conditions, that many companies want to get involved

- However, new businesses have to spend a lot of time and expense for the brand identity, while many brands of honey have great reputation in the market At the same time, major honey products are used for export - sale in the domestic market is very difficult, but the refined honey to adapt to technical barriers of importing countries export is not simple So many businesses are reluctant to this issue

- Currently Vietnam Association honeybees are not encouraged to recruit new member If honey producers that are not members of the Association, it is very difficult for them to sell honey product due to insufficient export reputation

In summary: Barriers to entry Vietnam honeybee production is currently very difficult for new firms

2.2.2.2 Pressure from customers

- Distributors in Us and Japan have huge business and good reputations, and domestic distributors also have experiences of honey product The loyalty of customer to the Bach Viet brand is quite strong if the company remains of increase product quality without changing price

- Bach Viet brand meets technical standards and creating credibility of importers and distributors and sold directly to consumers so the company does not have much pressure exerted by customers However, due to the requirements of food safety, ensure consumer health, all imported countries require higher technical standards for imported honey This is a pressing issue for businesses in general

as well as Bach Viet

2.2.2.3 Pressure from Suppliers

- Purified honey of Bach Viet is made from raw honey then through the refining process, separation of impurities, processing into finished products In general, due to being a unique enterprise product honey that meets the country's eligibility for export, Bach Viet has certain advantages in buying from supplier and prioritization of selecting resources At the same time, Bach Viet often works with areas that have high quality product hence the company is very active with inputs

- However, it doesn’t matter the source come from which suppliers, the company must has sufficient finance to pay in advance to suppliers so this is a big difficult that put Bach Viet in tough situations as buying large quantity of materials, long-term delivery, ensuring production reserves

In summary, in terms of suppliers Bach Viet is under pressure and this is a fact can not be changed if the financial situation of the company is too weak

2.2.2.4 Pressure from substitute products

In terms of the usage of honey as tonic or body treatment, the product is easy to be replaced However, beside usage as described, honey is a natural product, attractive color, taste, sweetness pleasant, easy maintenance, friendly to environment and especial the use of pure honey does not cause any side effects All features make honey very special and almost irreplaceble when it reached the prescribed technical standards Hence there is almost no pressure of alternative product

2.2.2.5 Pressure from existing competitors

Domestic enterprises:

- In 25 companies and firms of honey production, there are many companies have financial strength, strong brand on the market so the competitive status is quite complex Regarding quality of pure honey, Bach Viet is the leader in the manufacturing business, but the production volume is still small

- There are some direct export merchants causing drastic sell in the market Fake product, low quality affects the reputation and export situation, caused damage

to the industry and the Bach Viet company

- Below some strengths and weaknesses of Bach Viet’s domestic competitors:

Strengths:

 Strong financial resources

 Vast experience in international trade

 Abundant raw materials

 Large volume production

 Product returned because of insufficient technical standards, which affect brand reputation

Foreign enterprise

Some countries export large amount of honey as China, Argentina, Canada have big advantages of financial capability, competitive price policy, good marketing and promotion and strong product capability However, VietNam companies – especially Bach Viet – have better reputation with stable quality and all of honey product from VietNam is now qualified to export to the world market

2.2.2.6 External Factor Evaluation Matrix (EFE)

From the analysis of the factors that influence the external environment from chapter II and evaluate way the company response to the opportunities and challenges, we can evaluate the external factors as follows:

importance

Classification

of resilience

Important Points

I Oppoturnities

1 Social and political situation is stable 0.06 2 0.12

2 The world economy and Vietnam is

5 Information and communication develop 0.06 2 0.12

6 Advanced production technology,