Improving business strategy of Hanoi Milk Factory in the period 20082012

The report was completed with the entusiastic help of lectures, scientists, colleagues and friends. I would like to express my heartfelt thanks to these precious helps.First of all, I would like to express my profound thanks to Business School National Economics University, especially professors and tutors for their supports and lessons dring my time in EMBA4 program. I would like to expresse special thanks to Ass.Prof.Dr Nguyen Van Phuc, my supervisor who has provided valuable advise, guidance, and insights for my thesis.I also would like to thanks to Mr.Vu Truong Thanh, Director of Hanoi milk factory, who has given me great support and guidance. I would like to thanks to all my classmate of the EMBA4th Intake for entusiastic supports to my accomplishment today.Finally, I would like to thanks to all members in my family, who have give me the best conditions during I attended MAB course.

CHAPTER TITLE PAGE

2.1 Essence, role and classification of business strategies in an enterprise 42.1.1 Essence of business strategies in an enterprise 4

2.1.3 Types of business strategy of the enterprise and their applications 5

2.2 Requirements for the enterprise s business strategy’s business strategy 72.2.1 The business strategy will support the enterprise to stabilize its directions

2.2.3 The business strategy is built on the basis of overall analysis on the

2.2.4 The business strategy of an enterprise should be updated periodically to

2.3 factors affecting formation and performance of the business strategies

2.4 Process and organization of building business strategies of the enterprise 14

2.4.1 Analysis of business strategic environment 152.4.2 Orientation formation and strategy selection 152.4.3 Plan determination and suitable solutions suggestions 162.4.4 Strategy determination and strategy popularization 16

3 ANALYSIS OF CURRENT STATE OF BUSINESS STRATEGY IN

HANOI MILK FACTORY

3.1 Establishment and development of Hanoi milk factory 17

3.2 Main properties of Ha noi milk factory affecting on strategy of factory 18

3.2.6 Human resource and human resource development policy of factory 29

3.3.1 Development objectives and strategy of Vinamilk Joint Stock Company 313.3.2 Development objectives and strategy of Hanoi Milk Factory 32

3.4.3 The milk market 36

3.5 Limitation and inadequacies in business strategy of factory 373.5.1 Limitation and inadequacies in business strategy of factory 373.5.2 Main reasons causing the inadequacies in business strategy 38

4 KEY ADJUSTMENTS OF BUSINESS STRATEGY OF HANOI MILK FACTORY FOR 2008-2012 PERIOD AND SOLUTIONS FOR THEIR IMPLEMENTATION

4.1 Essential adjustments of business strategy of Hanoi milk factory 404.1.1 Essential adjustments to product and service strategies of the factory 404.1.2 Adjustments to strategic market and marketing strategy 414.1.3 Essential adjustments to strategy of developing human resource of the

4.1.4 Essential adjustments to financial strategy of the factory 424.1.5 Competitive strategy of the factory for new period 43

4.2 Major solutions to performance of business strategy of the factory 43

4.2.3 Improving the management information system 454.2.4 Improving quality of human resource of the factory 464.2.5 Improving equipment, technology of the workshop and carry out

4.2.6 Solutions to implementing systems ISO and HACCP comprehensively 49

BVQI : Bureau Veritas Quality International

EU : Europe

GMP : Good Manufacturing Practice

HACCP : Hazard Analysis and Critical Control Points ISO : International Standard Organization

SSOP : Sanitation Standard Operating Procedures USA : United State of American

WTO : World Trade organization

Diagram 2.1: Trading environment of business 8 Diagram 2.2: Business strategy building procedure 15

Diagram 3.3: Qualification of labors in factory 30 Table 3.1: Production result of Hanoi Milk Factory 17

Table 3.3: Production output from 2005 to 2007 34 Table 3.4: Objectives and implementation result in 2007 35 Table 3.5: Rate of customer claim for unsuitable products 36

The report was completed with the entusiastic help of lectures, scientists, colleaguesand friends I would like to express my heartfelt thanks to these precious helps.

First of all, I would like to express my profound thanks to Business School National Economics University, especially professors and tutors for their supportsand lessons dring my time in E-MBA4 program

-I would like to expresse special thanks to Ass.Prof.Dr Nguyen Van Phuc, mysupervisor who has provided valuable advise, guidance, and insights for my thesis

I also would like to thanks to Mr.Vu Truong Thanh, Director of Hanoi milkfactory, who has given me great support and guidance

I would like to thanks to all my classmate of the EMBA-4th Intake forentusiastic supports to my accomplishment today

Finally, I would like to thanks to all members in my family, who have give methe best conditions during I attended MAB course

CHAPTER 1 INTRODUCTION1.1 Rationale of thesis

Event of Vietnam becoming the official member of World Trade Organization(WTO) on 07/11/2006 is an important milestone that marks the integration route ofVietnam economy into world economy by bringingalso brings Vietnameseenterprises into a new playing field with much more opportunities and challenges

In this playing field, the role of business strategy becomes more and more special

important However, but in realityfact many Vietnamese enterprises have not reallypaid attention to building business strategy for their own

Hanoi Milk Factory is directly under Vietnam Milk Joint Stock Company It isfacing a lot of difficulties due todue to the pressure of the economy in theintegration process and increasing requirements of customers

Having thorough awareness about importance of business strategy, HanoiMilk factory has proposed manya lot of solutions in order to carry out well businessstrategy successfully and ensure the long term development of factory

However, current business strategy of the factory was built up since a longtime ago, therefore so that it is still subjective and has not followed closely the real

demand of market, especially lacks the competitive analysis that presents the

unsuitability to integration orientation and fierce competition as present

During a study process at in Academy of Business Administration,approached to business theories and business models of domestic and foreigncompanies, and received the interest and whole -hearted guideline of Dr Nguyen

Van Phuc, I presume to choose the topic Improving business strategy of Hanoi“Improving business strategy of Hanoi

Milk Factory in the period 2008-2012” as the theme for my graduation thesis

Choosing this theme helps me to apply my knowledge gathered in university

to find out some directions as well as solutions to help the factory to improve itsbusiness strategy which ensures the sustainable development and increases

competitive capacity of the factory in the short term as well as in the long term.However, due to limit time and my certain limitations on knowledge so that

my thesis can not avoid shortcomings and mistakes I would like to receive opinions

of teachers, friends and colleagues

1.2 Research objectives

- Analyzing business environment of enterprise, especially factors affecting on

competitive capacity of enterprise

- Re-analyzing and re-assessing current business strategy of the factory,

determining negative aspects and limitations of this business strategy.

- Suggesting some adjustments for strategy of the factory and basic solutions in

order to successfully carry out business strategies of Hanoi Milk Factory in the period

with many challenges for enterprises of Milk Industry in the period of 2008-2012

1.3 Objects and scope of study

1.3.1 Object of study

- Business system of factory includes production system of Vietnam MilkJoint Stock Company and agent system of factory in Hanoi area

- Some retail and wholesales agents in Hanoi area

- Some other milk production plants in Hanoi area

- Interviewing some agents of factories in Hanoi area and the surroundingsarea of Hanoi

- Researching secondary documents and information (research result ofscientist and officials carried out in the past 3 years; works and summary reportsrelating to milk market…))

1.5 Structure of thesis

Chapter 1: Introduction

Chapter 2: Argumentative basis of the strategy

Chapter 3: Analysis of current state of business strategy in Hanoi milk

factory Chapter 4: Key adjustments of business strategy of hanoi milk factory for

2008-2012 period and solutions for their implementation

Chapter 2 Argumentative basis of the strategy

2.1 Essence, role and classification of business strategies in

an enterprise

2.1.1 Essence of business strategies in an enterprise

In terms of strategy, it is thought to be science and art of military commandwhich are applied to make overall plans and conduct large-scale campaigns

In the 60th decade (the 20th century), the strategy was brought into businessand the term “Improving business strategy of Hanoibusiness strategy” appeared Due to differentce approaches, the term

“Improving business strategy of Hanoistrategy” is, however, explained in various ways

Mintzberg says that strategy is a model in the flow of decisions and operationprograms Thus, in his opinion, it can originate from wherever it can be studied andsupported

Mr Porter considers “Improving business strategy of HanoiStrategy as an art of constructing sound competitive

advantages for defense” In his opinion, doing business needs tricks, seizure of the

investment opportunities, quick payback, etc

Raymond Alain Thietart has a different idea which considersthat is “Improving business strategy of Hanoistrategy

beingis a combination of decisions, actions concerning selections of means anddistribution of resources in order to gain certain targets”

There is another thought that strategy is a long-term general act programorienting the whole enterprise’s business strategys activities to determined targets

However to approach it, the nature of business strategy is still to outline thefuture image of the enterprise in the operation and exploitation area The businessstrategy defines long-term targets as well as essential solutions to performance ofthe defined targets

Therefore, it is possible to say that business strategy is acknowledged to be aprinciple or a guideline in business Accordingly, the business strategy andorganization of good strategy performance are prerequisites for the enterprise’s business strategyssuccess in business

2.1.2 Role of the business strategy

Based on mentioned-above ideas, the business strategy plays important role in

the survivalexistence and development of an enterprise

+ The business strategy is a common orientation for all the activities of theenterprise, helpings it determine its own purposes and methodsway in each period,

and assure its long and stable development

+ The business strategy is a basis for all the members to know their tasks and

to undertake to do them

+ The business strategy support the enterprise to exploits its strenghts andreduce its weaknesses in orderong and weak points to create competitive advantages

as well asand make use of all the competitive opportunities and minimisereduce

risks for the enterprise’s business strategys operation

+ The business strategy is a basis or foundation to select business scheme,investment scheme, technological innovation, market extension, etc

In conclusion, if each enterprise desires to surviveexist, develop and achieve

its goalsadvantages in the fierce competition, it will need a distant vision, andforecast for the fluctuation of the environment andor in other hand, a properbusiness strategy

2.1.3 Types of business strategy of the enterprise and their applications

There are many various business strategies with a lot of classifications subject to each angle

2.1.3.1 Based on the nature and scale of application

+ Associated business strategy: front association, back association, horizontalassociation and vertical association

+Intensive business strategy: make inroad into the market, develop market,and discover mistakes

+ Expansionary business strategy: Concentric diversification, horizontaldiversification, vertical diversification and mixed diversification

+ Specific business strategy: joint-venture, association so as to narrow theoperation and liquidation

2.1.3.2 Based on levels of the strategy

Accordingly, the strategies are classified as the followings:

+ Corporate-level strategy: includes growth strategy, strategy of stability,withdrawal strategy

+ Unit-level strategy can be divided into three basic competitive strategiessuch as:

Cost controlled strategy

Differential strategy or product strategy

Centralization strategy: associated strategy, strategy baseding on the Enterprise’s business strategyscompetitive position and strategy based on the position of line of business

+ Functional strategy (support strategy): production strategy, financialstrategy, human resource staff strategy, technological strategy

2.1.3.3 Based on approach orientation

+ Concentration strategy and key factors: Throughought directing the strategy,

the strategy making is concentration on decisive activities for production andoperation of the enterprise

+ Relative advantage basing strategy

Foundations of the strategy making are to analyze and compare products andservices of the enterprise with those of its competitors, and hence to find out itscompetitive advantages used as supports for the business strategy

+ Offensive creative strategy: In the strategy making, it is necessary to lookstraight at the problems which are intrinsically considered beingto be popular andimpossible to do in other way, answering “Improving business strategy of Hanoiwhy?” question and then finding out newdiscoveries for the enterprise’s business strategys business strategy

+ Free-level exploitation strategy: the strategy made here is to exploit theprobable capacities of the factors surrounding the key factor

2.1.3.4 Based on management process

+ Orientation strategy

+ Act strategy

+ Emergency strategy

2.2 Requirements for the enterprise s business strategy’s business strategy

2.2.1 The business strategy will support the enterprise to stabilize its directions in business and development

Just since the establishment date, Tthe enterprise needs tocessarily identifyied

its direction and tasks What is the main task of the enterprise It is hardly difficultfor small and middle scale enterprises to determine their business line but it is more

complex for the larger scale enterprises to do souch because they participate inmany business lines

After clearly defining its tasks and targets, the enterprise should set upmakes

the business strategy with principles which are suitable forwith its targets andsupporting its long-term growthdevelopment

2.2.2 The business strategy should be practical

Any enterprises have their own strengths and weaknessesong and weak points,

so it is important for them to discover and promote their strengths andsimultaneously restrict their weaknesses

The strategy made by the enterprise will help it exploit its strengths

In other words, the business strategy should be practical and assure the

National environment International environment

effective use of the enterprise’s business strategys resources

+ Assure the effective use of infrastructure and physical capacities of theenterprise

+Use resources of thein business in a balanced way

+ Maintain the rate of growth

+ Assure the activeness and creativeness offor the demand forecasting of themarket

2.2.3 The business strategy is built on the basis of overall analysis on the business environment

The business environment is understood as a combination of inside andoutside factors which mutually interact or move, indirectly or directly affect theenterprise’s business strategys operations

The business environment influences the enterprise or in other words it maybrings opportunities to the enterprise and sudden risks which the enterprise cannotanticipate

TFactors of the business environment has been always move and changinge

continuously, so the enterprise is required to adapt itself to these changes in time

To adapt itself to the business environment, the enterprise must continuouslystudy and , analyze the environment Doing these well will bring about theenterprise capacities of searching opportunities, finding out dangers and obstaclesfaced bying the enterprise in order to help it give solutions and have soundfoundations and orientation to exact business decisions which will create thecompetitive benefitsadvantages Therefore, it is confirmed that to make the businessstrategy or business decisions, managers should pay attention to studying, analyzingand forecasting the business environment

Diagram 2.1: Trading environment of business

Branch environment

Businesss

2.2.3.1 International and regional environments

Changes of the international and regional environments may createopportunities and dangers for the domestic and foreign market extension of theenterprise Globalization, multilateral treaty of alliance, bilateral relationshipbetween countries, system of international law and practice, tendency of the regionaleconomic integration, prosperity and crisis of the regional and internationaleconomy, etc influence the enterprise’s business strategys activities directly or indirectly.Consequently, it is necessary for the enterprise to analyze and anticipate factors inorder to identify its proper directions

2.2.3.2 National environment

National environment has impacts on all the business lines, influencinges theenterprise’s business strategys activities indirectly and consistings of economic factors, political andlegal factors, technologicaly, culturale, social factors and, natural factors andinfrastructure These factors have mutual close relations and intermixture

The enterprise need to delve into detailed analysis on the forces to identifyso as

to realize its strengths ong and weaknessesk points and then have appropriatesolutions which help the enterprise maketo making use of its opportunities andrestrictingthe dangers brought from the business environment

2.2.3.4 Internal analysis of the enterprise

Internal environment is understood as the total of internal factors in theenterprise, including human resource, capacity of study, development, marketing,finance and etc The enterprises need to analyze their internal factors carefully toidentify their strong and weak points On that basis, they will be able to have solutions

to reduceing weaknesses and promoteing strengths in order to gain the maximum

benefitsadvantages

2.2.4 The business strategy of an enterprise should be updated periodically

to adapt itself to changes of the market

To set upmake strategies for the enterprise, it is important to forecast types ofbusiness environment which the enterprise will meet for a short or long time To do so,the enterprise should update information about customers as well as, consumers’s business strategytendency for selection and other factors such as culture, law, politics, etc concerning theenterprise in order to give proper strategies These factors always change or fluctuate sothe enterprise might need to shall update information for certain periods for adoption

2.3 factors affecting formation and performance of the business strategies of the enterprise

2.3.1 Internal factors

Constructing business strategies of the enterprise is under influences of manyinternal factors A successful enterprise is who understands and get a good hold ofits internal factors such as targets, tasks, organization mechanism, status of human

resource, products, target market, etc and accordingly make an appropriatethe proper

business strategy

2.3.1.1 Targets and mission of the enterprise

The target is the enterprise’s business strategys desire in the future, and the goal for ittheenterprise to reach A target itself contains ahas its own strategy Therefore, getting agood hold of its targets and mission will help the enterprise put forward strategies

which are suitable for with changes of the market so as to achieve its present targets

as well as long-term ones

2.3.1.2 Design and organization mechanism of the enterprise

Strategic targets prescribe the organization mechanism of the managementapparatus as well as policies which will be made The organization mechanism of theenterprise in general and the organization mechanism for management in particular

is one of the essential conditions to implement the strategic targets

Changing strategy will lead to changes in manner and, enterprise structure.Changing organization structure is a core matter for the period of strategy performance

2.3.1.3 Resources of the enterprise

It is possible to say that resources are a necessary condition about humanbeings and essential means to assure the maintenance and development of theenterprise according to determined targets Particular resources consist of humanresource, financial resources and technical and technological resources of technique

and technology

2.3.1.3.1 Human resource s

.Human resources plays an important role in production By labor, people exerttheir influences on the production objects to make production value In a the businessstrategy of the enterprise, sections such as construction, management of implementationand organization, test and evaluation are all done by its qualified staffs

Assessing status of the human resource helps the enterprise determine targetsand policies on developing, cultivating and training the manpower so that it issuitable forwith long-term targets and strategies

2.3.1.3.2 Resource of technique and technology

Level of machinery, equipment and technology has great impacts onproduction and competition of the enterprise It influences not only cost index butalso products, product quality, supply time and, production capacity of the enterprisedirectly as well

For the enterprise with modern system of machinery, facilities and advancedtechnology of production, products made by it will have higher quality, lower price,and thus higher competition

This is an important factor for setting upmaking the business strategies of theenterprise

2.3.1.3.3 Financial resource

For the enterprises,F financial resource plays an important role in preparinginformation for the strategy construction Status of financial indexes evaluates theenterprise’s business strategys position in the market and is used as foundations to make the businessstrategies

2.3.1.4 Select strategies of the enterprise for products and target market

The term “Improving business strategy of Hanoitarget” is used to indicate particular goals and results the enterprisestrives to gain Based on the time, they are divided into long-term and short-term targets.The proposed target should be suitable with features of the advantage, status ofresources in the enterprise

The strategy is build to implement the proposed targets Subject to long-term orshort-term targets, the enterprise will build appropriate business strategiesy

In the business world, each enterprise needs to produce products on which themarket has demand but not products which it can be produce As a result, theenterprise has to build its own specific strategies for productions, marketing, human

resourcestrategy These strategies might affect viability and development of thatenterprise

2.3.1.5 Enterprise culture

Strategies are usually setmade on the basis of existing cultures In a largesociety, each enterprise is considered to be a small society with a private culture

“Improving business strategy of HanoiEnterprise culture has a strong attachment to social culture, is an advance of thesocial culture, is the depth of the social culture”, a famous American manager said.The enterprise culture requires both attention to capacity and production efficiencyand attention to relation between employer-employee, relation between a person and

a person Broadly, if the whole production is built on an enterprise culture with highlevel, it will have the national characteristics and adapt itself to present era Process

of forming the enterprise culture is a long process and influenced by many factorsincluding three important ones such as national culture, leadership, and learningfrom the outside

It may be realized that to build an appropriate proper business strategy,attention to the enterprise culture is needed because:

The enterprise culture creates manners and attitude of the enterprise anddifference between onethis enterprise and another

The enterprise culture creates or orients the whole enterprise

The enterprise culture encourages innovation and invention

2.3.2 Business environment

The business environment is understood as all the factors affecting productionand business of the enterprise To propose effective business strategiesy, to make thebest use of State policies and, to use resources rationally, the enterprise shouldconsider degrees of the business environment’s business strategys impacts on the business strategy

2.3.2.1 Socio-cultural environment

Many lessons show that a lot ofr enterprises faileds because they did not payenough of not paying attention to the cultural socio-cultural environment and itsdevelopment Matters related to manners and customs, morality and lifestyle ofpeople, religious ideologies, population structure, increase in population, habits ofconsumption, tastes, income of people, etc have great impacts on the success andfailure of the enterprise

Changes inof the socio-cultural environment also create opportunities andobstacles for the enterprise, which slowly but profoundly influence the enterprise’s business strategysoperation Consequently, it is necessary for the enterprise to pay attention to thesocio-cultural factor while building the business strategies

2.3.2.2 Economic environment

The economic environment is a very improtant factor which has especiallyimportant role and great impacts on the business strategy of the enterprise Analyzingthe economic environment is to consider factors affecting not only the businessactivities of the enterprise at present but also the growthdevelopment of the enterprise in

future The economic environment, which mainly influencesing the enterprise, consists

of GDP rate of economic growth, macroeconomic policies, business cycle, rate of

inflation rates, unemployment, rate of exchange rates, financial system and , market rate

of interest rates

In tendency of integration into the international economy as at present, thisfactor brings many opportunities for the enterprise but at the same time, a lot ofchallenges to which the enterprise has to find solutions in order to build adaptablebusiness strategies

2.3.2.3 Policy and political environment

Policy and politics of the Government have increasingly influenced theenterprise’s business strategys activities much Any enterprises have to abide by economic regulations

and, policies of the government

Stability of politics, political institution and, consistency of policies (tax policy,financial policies) haves positive impacts on the enterprise

Therefore the enterprise should meticulously analyze political factors andpolicies to build strategies correctly according to regulations towards positive way

2.3.2.4 Legal environment

System of law, system of tools and regulations of the State are key parts formingthe environment of the institution directly concerning the enterprise’s business strategys operation suchas: regulations about employment of workers, taxes, advertisement, environmentalprotection, etc

In conclusion, it can be is possible to said y that stability of politics, and

policies y and , law is always a foundation for enterprises, business organizations to

be stable and is the good and attractive environment for investors The enterprises

will base on this factor both to construct their business strategies and assure thedevelopment and attract foreign investors

2.3.2.5 Requirements about the natural environmental protection

The natural environment is always especially important not only for livingconditions of human beings but also for the input of economic industries It

includesconsists of geographical position, climate, land, river, mineral resource,ecological environment, etc

Identifying natural externalities and their effects will help the enterpriseorient the operation targets to exploit their strengths advantages best and topropose correct strategies for studying, developing and producing productssuitable with the environment, ecological protection, under international and

national constitution and law.

2.4 process and organization of building business

strategies of the enterprise

Building and organizing business strategies of the enterprise are implemented

in various ways, but theyir can be generalized as follow:

Step 1: Analyze the environment of the business strategy (identify opportunitiesand risks for the enterprise)

Step 2: Form orientations and select

Step 3: Determine plans and propose strategic solutions

Step 4: Decide the strategy and popularize it inside the enterprise only

Diagram 2 2: Business strategy building procedure

2.4.1 Analysis of business strategic environment

Analysis of business strategic environment supports enterprise to organize andbuild up suitable and effective strategy In this step, baseding on its own targets,enterprise will analyze and assess business environment, determine opportunities,strengths, and weaknesses…) of enterprise by suitable tools This is the base tofor

forming and selecting strategiesy for next steps

2.4.2 Orientation formation and strategy selection

In order to select strategy effectively and suitably, enterprise must determine itsresponsibilities and since then to form strategic targets According toBasing on the

Analysis of business strategic environment

Orientations formation and strategy selection

Plans determination and strategic solution suggestion

Strategy decision and strategy popularization in inner enterprise

analysis and assessment of business strategic environment, enterprise will form itsstrategic orientations.

Since the date of birth, enterprise must define the way and responsibilities foritself: which products will be produced or which business line will be developed.Business target s are always connected to revenue, profits, expenses, productivity,market shares, enterprise’s business strategys prestige and enterprise development

Thus, after determining my responsibilities and targets, enterprise will analyzebusiness strategic environment in order to select, and build up business strategies

and organize to carry out suitably those strategies

2.4.3 Plan determination and suitable solutions suggestions

After analyzing business strategic environment, determining businessorientations for building up strategy, enterprise suggests plans then analyzes andchooses the most feasible plan In order to do this step, above steps must be analyzedand assessed exactly

2.4.4 Strategy determination and strategy popularization

Implementation of selected strategies is very important In order Ttoimplement and popularize strategy, enterprise must analyze generally its inner todetermine the strengths and weakness weaknesses then analyze potential pros andcons advantages when applying new strategy and popularize strategy in the wholeenterprise so that all members of thein enterprise can implement that strategytogether

Chapter 3 Analysis of current state of business strategy

in Hanoi milk factory 3.1 Establishment and development of Hanoi milk factory

Hanoi Milk Factory is located next to Phu Thinh Industrial Zone, Gia Lamdistrict, Hanoi city It and was build and officially operated since 1995

The Factory is established according to Decision No 1412/TCL§ dated9/10/1995 of Minister of Light Industry (Ministry of Trade now) Hanoi MilkFactory is a unit directly under Vietnam Milk Company (and shifted to VietnamMilk Joint Stock Company since December 2003) with head quarters at 184, 186,

188 -Nguyen Dinh Chieu, District 3, Ho Chi Minh city

- Total area of factory’s business strategys plan: 25,000 m2

- Total construction area: 15,000 m2

- In 2006, the project of factory expandeddation to a plan area of 50,000 m2.was carried out

 Hanoi Milk Factory is responsible forto producingt 4 main product groups

which are:

- Sweetened condensed milk

- Pot yoghurt and drinkable yoghurt

- Sterile milk products

- Different types of ice-cream

In the first year when the factory began to run its production system, the labourproductivity was so low thatwith low labor productivity, italmost production line

reached only 30-40% machine’s business strategys capacity However, thebut operation of Hanoi Milk

Ffactory has grown since the beginning of 2007

Table 3.1: Production result of Hanoi Milk Factory

Total production

(VND) 467.786.000.000 520.453.000.000 598.688.000.000

(Source: Hanoi Milk Factory)

3.2 Main properties of Ha noi milk factory affecting on strategy of factory

Properties mainly affecting on business strategy of Ha Noi Milk Factory

3.2.1 Products, service s and target market

3.2.1.1 Products, service s

Hanoi Milk Factory produces 4 main groups of product:

* Group of sweetened condensed milk

This group includes many products with different processing formula and wrappingNet weight is 380 gram/can with tin wrapping and paper label Products include: White Ong Tho sweetened condensed milk

Red Ong Tho sweetened condensed milk

Sweetened condensed milk of green Southern Star

Sweetened condensed milk of red Southern Star

Main raw materials for production: milk powder, fresh milk, whey powder,cane sugar, plant oil, auxiliary raw material: stabilizer, lactose, lexithin, flavoring,vitamin and additive…)

* Sterile milk

These products are packed in cans and boxes with volume of 200ml of Tetrapakand produced by different formulas:

 Flex sweetened and evaporated fresh milk

 Vinamill strawberry and cocoa fresh milk

 Vinamill sweetened and evaporated fresh milk

 Mill strawberry and cocoa fresh milk

 Different types of Millca fresh milk

Main raw materials for production: milk powder, fresh milk, whey powder, canesugar, water

Auxiliary raw material: stabilizer

 Strawberry and orange youghurt

 Calcium, low-fat yoghurt

 Main raw materials for production: milk powder, fresh milk, whey powder,butter, cane sugar and enzyme

Auxiliary raw material: stabilizer, different types of jam, calcium

* Ice-cream

Ice-lolly is packed by paper and PE-covered bag Ice-cream sandwich is packed

in closed box and persevered in special temperature (-180C), including:

Auxiliary raw material: stabilizer, food coloring agent, flavoring

Raw material of Hanoi Milk Factory is supplied by two main sources:

+ Imported material source usually makes up 70% of total production

costsvalue, includinges: milk powder, oil, butter, lacyose, whey powder, vitamin,mineral and wrapping

Most of theAlmost above materials are imported directly and indirectly fromforeign countries and that source is relatively stable Above materials and goodssatisfy requirements stipulated by Vietnamese Standard

+ Domestic material source makes up 30% of total production costs price MostofAlmost these materials are supplied by large domestic companies such as:

 RE sugar supplied by Lam Son Cane Sugar Joint Stock Company, Nghe An andBien Hoa

 Maltose sugar supplied by Tay Ninh Manioc Company

 Vegetable oil supplied by Cai Lan Oil Company

 Cardboard wrapping supplied by Ngoc Diep Company, Tan Thanh Dong

 Fress milk collected directly in large milk cow breeding regions such asTuyen Quang, Moc Chau, Ha Nam, Hung Yen, Hanoi suburbs with daily averagevolume of between 15,000 and 20,000 liter of material fresh milk

It can be saidis possible to say that this material group has a high

potentialdanger of bacteria contamination so the productionat process andpreservation must comply with strict hygiene principles

Materials used for manufacturing products of factory are mainly imported(70%) so that the factory can not save expenses In fact, the above materials areavailable in Vietnam but because it has not met the demand on food safety and

hygiene so theat factory has to import these materials

At present, living standards of people haves increased, hence so that the

requirements on product quality are paid attention to the most LowNo-qualityproducts will be removed out of market so that factory always tries to assure itsproduct quality

3.2.1.2 Demand and Target market

* Demand:

Some studies suggust that the nutrients in milk usfull for people

The produce of milk can help us maintain a healthey weight And the proteinhelps build muscle So we can say that, the product of milk is necessary for people

* Target market:

Besides target market is the Northern provinces and Southern provinces targetmarket, Hanoi Milk Factory plans to export its products to foreign countries such asThailand, Singapore, Japan…) In developed countries, it requires companies whichproduce products for export must seriously apply the quality verification system.Other markets such as Canada, New Zealand, Japan requests that export foodproduction lines must apply HACCP system (Hazard Analysis and Critical ControlPoint) in production and processing If factories apply this system, customers willreceive a lot of interests when using products such as reducing the danger ofinfectious diseases through foods and increasing life quality

To produce products that can satisfy the more increasing demand of market onproduct quality Vinamilk Joint Stock Company has built and applied the qualitymanagement system according to ISO 9000 in its underlying units, includinges

Hanoi Milk Factory

In 2001, BVO (Burea Veri tas International) granted Certificate of ISO 9002Quality System to Hanoi Milk Factory However, International Quality VerificationSystem (HACCP) has not been implemented because Hanoi Milk Factory has notmet the requirements on material facilities and engineering Therefore, this is a bigbarrier for the factory in case of wishing to export its products to strict markets

which haveand markets having developed foods production technology likeSingapore or Japan…)

3.2.2 Organizational mechanism of factory

Regarding organizationa, Hanoi Milk Factory has a relatively reasonablemechanism In order to supply adequately products with guaranteedensured quality

to customers, Hanoi Milk Factory assigns tasks to functional divisons and workshop

as follows:

* Board of Directors:

- Director in charge of general operations of factory

- Technical Director in charge of technical problems

- Production Director in charge of production operations

* Administrative and Personnel Board:

This Board is responsible for the following tasks:works

- Recruit and manage staffs

- Wage control and social policies

- Protection, vehicle management and appointment

- Collective dinning room, health, industrial hygiene

* Accounting Board:

- Carry out accounting operations

- Reckon up material, raw material and finished products

- Treasurer

* QA Board: Carry out works on checking and controlling quality of inputmaterials until semi-finished products during production process; monitor stored samplesduring expiry date of products; solving reclaimation of customer on product qualities

* Store team: Is responsible for carrying out works which relates to storeoperations, includinges: raw material, fuel, technical materials for production andstoring finished products from work shops for maintenance and consumption

* Technical Board: is responsible for carrying out technical operation relating

- Yoghurt production shop: specializes into producinge different types of yoghurt

- Ice-cream production shop: specializes into producinge different types of ice cream

Diagram 3.1 : Organizational structure

(Source: Hanoi Milk Factory)

Store

Director of company

Technical

director

Production director

Technical

board

Sweetened condensed milk shop

ative and personnel board

Accounting board

Electro-mechanical

board

Sterile fresh milk shop

Yoghurt shop

Ice-cream shop

Condensed milk